<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-13951
------------------------------
LEXFORD RESIDENTIAL TRUST
(Exact name of registrant as specified in its charter)
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<S> <C>
MARYLAND 31-4427382
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
41 SOUTH HIGH STREET SUITE 2410
COLUMBUS, OHIO 43215
(Address of principal executive offices including zip code)
(614) 242-3850
(Registrant's telephone number, including area code)
------------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
<TABLE>
<S> <C>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON SHARES OF BENEFICIAL INTEREST,
PAR VALUE $.01 PER SHARE
</TABLE>
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained to the best
of Registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]
As of March 30, 1998 aggregate market value of voting stock held by
non-affiliates (based on total shares outstanding reduced by the number of
shares held by trustees, officers, and other affiliates) of the Registrant was
$157,403,651 based on the closing price reported on the New York Stock Exchange.
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES X NO
--- ---
As of March 30, 1998 there were 9,203,916 common shares of beneficial interest
outstanding.
The following document is incorporated herein by reference: Registrant's Form
S-8 Registration Statement and Exhibits thereto dated July 8, 1997.
================================================================================
<PAGE> 2
LEXFORD RESIDENTIAL TRUST
FORM 10-K ANNUAL REPORT
FISCAL YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PART I: PAGE:
<S> <C> <C>
ITEM 1 BUSINESS ................................................................. 1
ITEM 2 PROPERTIES ............................................................... 14
ITEM 3 LEGAL PROCEEDINGS ........................................................ 14
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ...................... 15
PART II:
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS..... 15
ITEM 6 SELECTED FINANCIAL DATA .................................................. 15
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS ............................................. 17
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA .............................. 28
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE .............................................. 28
PART III:
ITEM 10 TRUSTEES AND EXECUTIVE OFFICERS OF THE REGISTRANT ........................ 28
ITEM 11 EXECUTIVE COMPENSATION ................................................... 34
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ........... 48
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ........................... 51
PART IV:
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K .......... 52
CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES .........................................F-1
</TABLE>
<PAGE> 3
PART I
This report contains forward-looking statements including, without
limitation: future appreciation in real property market value from investments
and improvements; competitive advantages based upon experience and quality of
service; business strategies; and increases in distributable cash flow available
to Lexford Residential Trust (the "Company") and the Company's qualification to
be taxed as a real estate investment trust ("REIT") for federal income tax
purposes. All of the forward-looking statements contained in this report
represent management's good faith projections of future results and are based
upon existing market, financial and economic conditions known to management.
Future changes or developments in national, regional and local economic and
market conditions, especially increased competition at any of these levels
within the multifamily residential property industry; changing demographics in
the specific locations in which apartment communities owned or managed by the
Company are located; the discontinuance of the identifiable trend towards
consolidation within the multifamily residential property industry generally;
increases in interest rates; or increasing inflation all may operate to render
the forward-looking statements contained in this report inaccurate. There can be
no assurance that any of the forward-looking statements will prove to be
correct. Actual results may differ and such differences may be material.
ITEM 1. BUSINESS
--------
THE COMPANY
Lexford Residential Trust, formerly known as Lexford, Inc. and Cardinal
Realty Services, Inc., is a Maryland real estate investment trust that invests
in and holds direct or indirect ownership interests in multifamily real estate.
Its wholly owned subsidiary, Lexford Properties, Inc., a Texas corporation
("LPI"), provides property management and related services to residential
apartment communities wholly owned ("Rental Properties") and partially owned
("Unconsolidated Partnerships") by the Company. The Company, through its
"Preferred Resources" division, also offers products and services to residents
at the Rental Properties and the apartment communities owned by the
Unconsolidated Partnerships. Where appropriate, references to the "Company" or
"Lexford" also mean and include LPI and the Company's other wholly owned or
controlled subsidiaries.
As of December 31, 1997, the Company had an ownership interest in 516
apartment communities (consisting of an aggregate of 36,050 apartment units) in
16 states. As of January 1, 1998, Lexford Properties, Inc. managed 576 apartment
communities (consisting of 47,849 apartment units) in 22 states. The Lexford
Properties, Inc. management portfolio included 513 apartment communities (35,844
units) in which the Company has an ownership interest (the "Properties" or
"Portfolio") and 63 apartment communities (12,005 units) managed for third-party
owners. As of January 1, 1998, the Portfolio consists of 405 sites, some of
which consist of multiple phases owned by different legal entities. This
includes 111 entities in which the Company or one of its subsidiaries owns all
of the equity interest and 405 entities in which the Company or one of its
subsidiaries serves as general partner of, and in most cases, also owns some
limited partner interest. Since December 31, 1997, and through March 25, 1998,
287 Properties formerly owned by Unconsolidated Partnerships have become Rental
Properties (SEE "RECENT DEVELOPMENTS").
On February 19, 1998, in connection with the Company's determination to
elect and qualify to be taxed as a real estate investment trust ("REIT") for
federal income tax purposes, the Company caused LPI to form Lexford Property
Management, Inc., an Ohio corporation ("LPM"), to succeed to the ownership and
operation of its third party property management business. (SEE "RECENT
DEVELOPMENTS").
<PAGE> 4
The majority of the Portfolio was constructed during the 1980s and is
comprised of buildings of modular construction. On December 31, 1997, the
average economic occupancy of the Portfolio was 92.1% and the average rent
collected per occupied unit was $429. The Portfolio is located in suburban,
secondary and tertiary markets in the midwestern and southeastern United States.
The Company's executive offices are located in downtown Columbus, Ohio
at The Huntington Center, 41 South High Street, Suite 2410, Columbus, Ohio
43215. The Company's main telephone number is (614) 242-3850. The Company also
maintains a financial operations office in suburban Columbus at 6954 Americana
Parkway, Reynoldsburg, Ohio 43068. Lexford Properties, Inc. is headquartered in
suburban Dallas, Texas at 8615 Freeport Parkway, Suite 200, Irving, Texas 75063.
The Company has regional offices located in Orlando, Florida, and in Houston and
San Antonio, Texas. On December 31, 1997, the Company employed 237 employees in
its corporate and regional offices and 1,961 employees at the Properties.
The Company's common shares of beneficial interest, par value $.01 per
share ("Common Shares"), are traded on the New York Stock Exchange ("NYSE")
under the trading symbol "LFT". The Common Shares commenced trading on the NYSE
on March 19, 1998 following the merger of the Company's predecessor, Lexford,
Inc., an Ohio corporation, with and into the Company (the "Merger"). The Company
became a publicly held company in 1992 as a result of the distribution of common
stock to creditors pursuant to the Chapter 11 bankruptcy reorganization of the
former Cardinal Industries, Inc. In connection with the bankruptcy
reorganization, Cardinal Industries, Inc. changed its name to Cardinal Realty
Services, Inc. ("CRSI"). CRSI registered its common stock under the Securities
Exchange Act of 1934 in June 1993, pursuant to a Form 10 registration statement.
From 1993 through March 1995, CRSI's common stock was traded on the OTC Bulletin
Board under the trading symbol "CNRV". In March 1995, CRSI listed its common
stock on the National Market Tier of the NASDAQ Stock Market sm. Prior to the
Merger, the common stock traded under the symbol "CRSI". In connection with the
Merger, each share of common stock was converted into the right to receive two
Common Shares. (SEE ITEM 5 - "MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS").
Prior to the Merger, on October 7, 1997, the Company's shareholders
approved an amendment to the Company's Articles of Incorporation changing the
name of the Company to Lexford, Inc.
RECENT DEVELOPMENTS
During calendar year 1997, the Company considered various alternative
strategies with respect to its investments in the Properties and with respect to
its property management and Preferred Resource services businesses. Since
January 1, 1996, based upon management's decision to retain the Properties for
investment, the Rental Properties have been fully consolidated in the Company's
Consolidated Statements of Income and the cash flows of the Rental Properties
have been classified as cash flows provided by operating activities in the
Company's Consolidated Statements of Cash Flows.
The Company's management recognized that the inclusion of the Rental
Properties in its consolidated financial statements depressed net income and,
consequently, earnings per share and gave the Company the appearance of being
highly leveraged even though mortgage indebtedness secured by the Properties is
non recourse to the Company. With the exception of 26 cross-collateralized,
cross-defaulted mortgage loans, mortgage indebtedness secured by the Rental
Properties is structured on a Property-by-Property basis. In the second quarter
of 1997, the Company formed a subsidiary corporation named Lexreit Properties,
Inc. ("Lexreit"), and filed a Form S-11 Registration Statement with the
Securities and Exchange Commission. The Company proposed to contribute
substantially all of its equity ownership interests in the Rental Properties to
Lexreit, to distribute 95% of the common stock of Lexreit to the Lexford
Shareholders (the "Lexreit Spinoff") and to cause Lexreit to qualify and elect
to be taxed as a REIT.
2
<PAGE> 5
In the weeks following the announcement of the formation of Lexreit,
the Company received comments from its significant shareholders, industry
analysts, representatives of investment banking firms and representatives of
participants in the multifamily residential real estate and REIT industries.
Most commentators positively endorsed the Company's plan to implement a
transaction which would result in the creation of a REIT, as well as the removal
of the appearance of significant leverage from the Company's Consolidated
Balance Sheet, however they suggested that the plan could be enhanced by
increasing its scope, i.e., that Lexford itself effect a REIT election covering
the entire Portfolio of Properties. In the weeks following the filing of the
Form S-11 Registration Statement, the Company's management engaged in further
discussions and began an intensive analysis of the feasibility and the effects
of the Company electing on its own behalf to be taxed as a REIT.
In August 1997, after consultations with Lexford's independent
accounting firm and outside legal counsel, the Company's Board of Directors
authorized management to proceed with its analysis of effecting REIT status and
engaging a financial advisor. At its Annual Meeting of Shareholders on October
7, 1997 and in a news release published immediately following the Meeting, the
Company announced that it was seriously evaluating a REIT election and that it
had withdrawn its previously announced intention to effect the Lexreit Spinoff.
The Company retained Morgan Stanley & Co., Incorporated as its financial advisor
on October 15, 1997. On December 19, 1997 the Company's Board of Directors
determined that a REIT election and the merger of Lexford, Inc. into a Maryland
real estate investment trust were in the best interests of the Company and its
shareholders.
Preparatory to the election of REIT status, the Company and its Board
of Directors, effective November 1, 1997, decided to embark upon a program to
consolidate ownership of the Unconsolidated Partnerships (the "Consolidation
Program"). In connection with the Consolidation Program, the Company determined,
with respect to each Unconsolidated Partnership, whether or not the agreement of
limited partnership governing the Unconsolidated Partnership required the
consent of the limited partners to a transfer of the Property owned by the
Unconsolidated Partnership, or equity interests in the Unconsolidated
Partnership, to an affiliate of the Company. The Company also carefully
evaluated the assets and liabilities of each Unconsolidated Partnership,
including the fair value of the Property owned by each Unconsolidated
Partnership. In those cases where the consent of the limited partners of the
Unconsolidated Partnership was required, the Company sought the consent of the
limited partners to a proposed merger transaction whereby the Unconsolidated
Partnership would be merged with a limited partnership formed for the purpose of
the merger, with the Company succeeding to 100% equity ownership of the former
Unconsolidated Partnership. In those cases where consent of the limited partners
was not required, the Company provided the limited partners with notice of its
intent to effect a transaction resulting in the Company's acquiring 100%
ownership of the Unconsolidated Partnership and/or the Property owned by the
Unconsolidated Partnership. The Company has reported the results of the
Consolidation Program to date on Forms 8-K filed on February 17, 1998 and March
2, 1998, respectively. As of March 25, 1998, pursuant to the Consolidation Plan
the Company had acquired 287 Properties formerly owned by Unconsolidated
Partnerships.
In order to effect its plan to cause a newly created Maryland real
estate investment trust to succeed to the ownership of the Company's assets and
the conduct of its business, the Company created Lexford Residential Trust, a
Maryland real estate investment trust, as its wholly owned subsidiary in January
1998. Lexford, Inc. and Lexford Residential Trust proceeded to file a joint
proxy statement/prospectus under cover of a Form S-4 Registration Statement with
the U.S. Securities and Exchange Commission ("SEC") in order to solicit proxies
for the approval of the proposed Merger as well as register Lexford Residential
Trust's common shares of beneficial interest under the Securities Act of 1933.
The SEC declared the Form S-4 registration statement effective on January 30,
1998 and, in accordance with the joint proxy statement/prospectus, a Special
Meeting of Shareholders was held on March 3, 1998. At the special shareholders
meeting, the Company's shareholders overwhelmingly approved the Merger. The
Merger was effective at the close of business on March 18, 1998 and,
accordingly, Lexford Residential Trust has
3
<PAGE> 6
succeeded to the ownership of the assets and the conduct of the business of
Lexford, Inc. The Common Shares were listed and admitted for trading on the NYSE
on March 19, 1998
Because the Company's traditional real estate services business
generates revenues which are, in whole or in part, considered "non-qualifying
REIT income," the Company caused LPI to create LPM on February 19, 1998. LPI
contributed substantially all of its assets, tangible and intangible, including,
without limitation, the manager's rights to management contracts incident to the
conduct of its third party property management business, to LPM in exchange for
all of LPM's issued and outstanding preferred stock (representing a 95% economic
interest in LPM). LPI retained all right, title and interest in and to all
contracts for services provided to the Unconsolidated Partnerships as well as
all of its goodwill, training programs, proprietary data with respect to
property management services and systems and its key executive officers. LPM
issued all of its common stock (representing an approximate 5% economic
interest) to Mark D. Thompson, John B. Bartling and the John B. Bartling
Irrevocable Trust for a total consideration of $50,000, payable in a combination
of cash and deferred subscription obligations. The transfer of the third party
management business to, and the capitalization of, LPM will result in reducing
non-qualifying REIT income derived from the Company's third party property
management business from gross revenues received in connection with the conduct
of such business to the net income derived in the form of dividends payable on
LPM's preferred stock held by LPI.
THE COMPANY'S BUSINESS
The Company has historically been engaged in two distinct businesses:
the real estate investment business in which it owns and operates multifamily
residential real estate (the "Real Estate Investment Business"); and the real
estate services business in which it provides fee-based management and other
services to multi-family apartment communities and their residents
(collectively, the "Real Estate Services Business").
The Company believes that, prior to its decision to elect REIT status,
the primary measure of its ability to generate cash for current obligations and
future acquisitions was Adjusted EBITDA (Earnings Before Interest, Taxes,
Depreciation and Amortization). Adjusted EBITDA is defined as EBITDA adjusted
for non-recurring items, plus principal payments received on account of second
mortgages held by the Company, less interest paid on mortgage loans to Rental
Properties. Management believes that, in addition to cash flows and net income,
EBITDA is a useful financial performance measure for assessing the operating
performance of an equity REIT because, together with net income and cash flows,
EBITDA provides investors with an additional basis to evaluate the ability of a
REIT to incur and service debt and to find acquisitions and other capital
expenditures and to make distributions to Shareholders. To evaluate EBITDA and
the trends it depicts, the components of EBITDA, such as rental and other
revenues, operating and maintenance expenses, real estate taxes and general and
administrative expenses, should be considered. Excluded from EBITDA are
financing costs such as interest expense as well as depreciation and
amortization, each of which can significantly affect a REIT's results of
operations and liquidity and should be considered in evaluating a REIT's
operating performance. Further, EBITDA does not represent net income or cash
flows provided by (used in) operating, financing and investing activities as
defined by generally accepted accounting principles ("GAAP") and does not
necessarily indicate that cash flows will be sufficient to fund cash needs. It
should not be considered as an alternative to net income as an indicator of the
Company's operating performance or to cash flows as a measure of liquidity. In
the aggregate, Adjusted EBITDA for the 12-month period ended December 31, 1997
was $18.7 million, an increase of 56.1% over Adjusted EBITDA of $12.0 million
for the year ended December 31, 1996. Consistent with its determination to elect
REIT status, the Company intends to begin reporting and emphasizing funds from
operations ("FFO") and cash available for distribution to shareholders ("CAD")
as its primary performance measures beginning with its income statements for the
first quarter of 1998 (SEE "REAL ESTATE INVESTMENT BUSINESS - FUNDS FROM
OPERATIONS").
In the aggregate, Net Operating Income ("NOI") of the Portfolio
increased approximately 2.8% over 1996 on a same-unit basis due primarily to an
increase of approximately 1.8% in Rental Revenue on a same-unit basis.
REAL ESTATE INVESTMENT BUSINESS
In its Real Estate Investment Business the Company focuses on its
equity ownership interests in the Properties comprising the Portfolio. Fee
4
<PAGE> 7
simple title to each of the Properties is owned by a limited partnership,
corporation or limited liability company which, in turn, is wholly or partially
owned directly or indirectly by the Company. The Company maintains at least a 1%
partnership (i.e., equity ownership) interest in each of the Unconsolidated
Partnerships, and typically a 9% to 10% managing general partner interest. In
addition to its equity investments (i.e., partnership interests) in the
Unconsolidated Partnerships, the Company holds interest earning receivables from
a majority of the Unconsolidated Partnerships. In most instances, the Company's
interest earning receivable from an Unconsolidated Partnership is the Company's
more meaningful income-producing asset. Positive cash flow generated from the
operations of Unconsolidated Partnerships is generally available to pay accrued
interest on receivables owing to the Company. Interest income on receivables
from Unconsolidated Partnerships has historically been a major source of Company
revenue. (SEE NOTE 1 TO NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.)
Following the completion of the Consolidation Program, interest income from the
remaining Unconsolidated Partnerships will represent a considerably smaller
portion of the Company's total revenues while rental revenues from the increased
number of Rental Properties will increase significantly.
The Company has traditionally provided product (asset) management
services to the Unconsolidated Partnerships. In addition, the following services
have been performed for the accounts of the co-owners (limited partners) of the
Unconsolidated Partnerships: informational and financial reporting services,
including tax return preparation and provision of tax return information; and
capital and financial planning, including determination of reserves, funding of
capital requirements and administration of capital distributions to partners.
The Company has earned fees for providing these services, as well as for its
efforts in successful mortgage loan refinancing transactions.
Location of Properties
----------------------
The table below indicates the geographic locations of apartment
communities in which the Company had an ownership interest at December 31, 1997.
<TABLE>
<CAPTION>
State No. of Properties No. of Units
------------------- ----------------------- --- -------------------
<S> <C> <C>
Alabama 9 1,296
Florida 128 8,994
Georgia 75 5,478
Illinois 4 281
Indiana 70 4,415
Kentucky 34 2,058
Maryland 5 413
Michigan 25 1,720
North Carolina 1 187
Ohio 137 8,336
Pennsylvania 9 580
South Carolina 3 269
Tennessee 5 348
Texas 1 67
Virginia 4 1,211
West Virginia 6 397
----------------------- -------------------
516 * 36,050
======================= ===================
<FN>
* The 516 Properties are on a total of 405 sites. Two properties were pending
disposal as of December 31, 1997 and are not included in the above table.
Differences between the number of Properties and the number of sites results
from different legal entities (principally present or former Unconsolidated
Partnerships) which own, or owned, apartment communities on contiguous parcels.
</FN>
</TABLE>
Rental Properties
-----------------
As of December 31, 1997, the Company's Portfolio included 111 Rental
Properties (8,261 units). The Rental Properties are owned by (i) limited
partnerships in which the Company or one of its wholly owned subsidiaries owns
all outstanding partner interests; (ii) limited liability companies in which the
Company and/or one of is wholly owned subsidiaries own all outstanding member
interests; or (iii) wholly owned subsidiaries of the Company.
5
<PAGE> 8
The following table summarizes the unaudited operating results of the
Rental Properties by quarter in 1997 and for the years ended December 31, 1997
and 1996. Certain amounts for 1996 and the first three quarters of 1997 have
been reclassified to conform to give effect to the Company's capitalization
program described in footnote (2) below. The results shown below are net of
management and other fees paid to the Company. Net income of these partnerships
would be significantly higher if presented after elimination of intercompany
payments representing such fees (about 9-10% of rental revenue on an aggregate
basis).
<TABLE>
<CAPTION>
Quarter Ended Year Year
---------------------------------------------- Ended Ended
March 31, June 30, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
1997 1997 1997 1997 1997 1996
============================================== =======================
Statistical information(1)
- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Properties at end of period 113 113 113 111 111 113
Average Units in Service 8,453 8,453 8,453 8,348 8,427 8,626
Average Economic Occupancy 90.3% 90.8% 92.6% 92.6% 91.6% 92.4%
<CAPTION>
Financial Information (000s omitted) (1)
- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Rental Income $ 9,862 $ 9,988 $ 10,218 $ 10,111 $ 40,179 $ 40,055
Other Property Income 325 454 525 368 1,672 1,221
-------- -------- -------- -------- -------- --------
Total Revenues 10,187 10,442 10,743 10,479 41,851 41,276
-------- -------- -------- -------- -------- --------
Expenses
Property Operating and Maintenance 3,533 3,732 3,823 3,636 14,724 14,447
Real Estate Taxes and Insurance 1,005 1,021 1,059 975 4,060 4,149
-------- -------- -------- -------- -------- --------
Operating Expenses 4,538 4,753 4,882 4,611 18,784 18,596
-------- -------- -------- -------- -------- --------
Net Operating Income 5,649 5,689 5,861 5,868 23,067 22,680
-------- -------- -------- -------- -------- --------
Interest - Mortgage 3,447 3,490 3,569 3,264 13,770 14,132
Interest - Corporate Advances 143 146 156 152 597 401
Major Maintenance (2) 549 558 (84) (144) 879 2,772
Non Operating 56 113 (190) 62 41 1,085
Depreciation and Amortization 1,236 1,257 1,350 1,358 5,201 4,745
-------- -------- -------- -------- -------- --------
Non Operating 5,431 5,564 4,801 4,692 20,488 23,135
-------- -------- -------- -------- -------- --------
Income/(Loss) after Certain Expenses 218 125 1,060 1,176 2,579 (455)
-------- -------- -------- -------- -------- --------
Capital Expenditures (2) $ 170 $ 203 $ 1,156 $ 856 $ 2,385 $ 701
======== ======== ======== ======== ======== ========
<FN>
(1) Not "same store " (not all same Properties in operation during all periods presented).
(2) The Company initiated a revised capitalization program effective January 1, 1997 which requires capitalization
of certain replacement items. In prior years all replacement items were expensed.
Note: See Exhibit 99.1 for Financial Information by Rental Property for each Rental Property as of December 31,
1997.
</FN>
</TABLE>
6
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Funds from Operations of Rental Properties
------------------------------------------
Funds from Operations does not represent cash flow from operating
activities in accordance with GAAP and is not indicative of cash available to
fund all of the Company's cash needs. Funds from Operations should not be
considered as an alternative to net income or any other GAAP measure as an
indicator of performance and should not be considered as an alternative to cash
flows as a measure of liquidity or ability to make distributions.
As defined by the National Association of Real Estate Investment Trust
("NAREIT"), Funds From Operations ("FFO") represents net income/(loss) (computed
in accordance with generally accepted accounting principles, consistently
applied ("GAAP")) before minority interest, excluding gains (or losses) from
debt restructuring and sales of property, plus real estate related depreciation
and amortization (excluding amortization of deferred financing costs), and after
adjustment for unconsolidated partnerships and joint ventures. The FFO of the
Rental Properties, for the years ended December 31, 1997, 1996 and 1995 is as
follows: (000s omitted)
<TABLE>
<CAPTION>
Funds from Operations
--------------------------------------------
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Rental Properties:
Income/(loss) before Extraordinary Items $ 2,579 $ (455) $ (2,745)
Depreciation on Real Estate 4,806 4,541 4,678
------------- ------------- -------------
$ 7,385 $ 4,086 $ 1,933
============= ============= =============
<FN>
Note: 1995 FFO has been restated for interest expense capitalized during the period the
Rental Properties were classified as Held for Sale (SEE NOTES 1 AND 2 TO NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS)
</FN>
</TABLE>
FFO increased approximately $3.3 million for 1997 as compared to 1996
due to the factors discussed in "Property Operating and Maintenance", (SEE ITEM
7 - "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS"), specifically as it relates to the capitalization of interior
replacement items. Excluding the effect of the capitalization, FFO increased
approximately $2.1 million or 33.7% for 1997, as compared to 1996.
The Company is continuing its efforts to successfully complete its
strategy to qualify and elect to be taxed as a REIT. As an adjunct to its REIT
strategy, the Company has initiated and partially implemented the Consolidation
Program (SEE "RECENT DEVELOPMENTS"). A significant majority of the Properties in
the Company's Portfolio have become Rental Properties and therefore FFO will be
a primary statistic available to investors to evaluate the Company's ability to
fund acquisitions and other capital expenditures and to make distributions to
shareholders (as required of REITs under the federal income tax laws and as
anticipated by investors and the public equity markets).
Cash Available for Distribution ("CAD") is another measure which the
Company will report in order to provide investors with another financial
performance measure. CAD will not necessarily represent the amount of cash the
Company will, in fact, distribute to its shareholders nor will it represent cash
generated from operating, investing or financing activities as determined in
accordance with
7
<PAGE> 10
GAAP. Some REITs refer to CAD as "funds available for distribution" or "FAD".
Beginning with the Company's financial statements for the quarter ending March
31, 1998, and thereafter, the Company intends to report FFO and CAD in
connection with its periodic reports.
Unconsolidated Partnerships
- ---------------------------
The Company holds receivables from substantially all of the 405
Unconsolidated Partnerships in which the Company had an ownership interest on
December 31, 1997, primarily in the form of second mortgages and advances to the
Unconsolidated Partnerships. Interest payments on these receivables generate a
majority of the interest income recognized by the Company. On December 31, 1997,
the contractual obligations of the Unconsolidated Partnerships on account of
second mortgages, advances and other payables, including related interest, was
$232.5 million (SEE NOTE 3 TO NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS).
In connection with the Consolidation Plan, through March 26, 1998 the Company
has acquired the entire equity interest in a total of 287 former Unconsolidated
Partnerships (all of which were among the 405 Unconsolidated Partnerships at
December 31, 1997). In addition, the acquisition of an additional 39
Unconsolidated Properties is pending final close. Accordingly, receivables owing
from these former Unconsolidated Partnerships should no longer be material to
the financial position of the Company on a consolidated basis. In addition, the
Company has announced that it will continue to seek the consolidation of a
number of additional Unconsolidated Partnerships in connection with the
Consolidation Plan and its intention to elect and qualify to be taxed as a REIT
(see "Recent Developments"). Over the past five years, cash flow from the
Unconsolidated Partnerships has improved, largely as a result of refinanced
first mortgage debt, investments in property improvements and increased NOI. The
improved cash flow allows for increased interest and, in certain instances,
principal reduction payments from the Unconsolidated Partnerships to the
Company.
The following table summarizes the overall unaudited operating results
of the Unconsolidated Partnerships by quarter in 1997 and for the years ended
December 31, 1997 and 1996. Certain amounts for 1996 and the first three
quarters of 1997 have been reclassified to conform to the quarter and year ended
December 31, 1997 presentation. The results shown below are net of management
and other fees paid to the Company. The net income of the Unconsolidated
Partnerships would have been significantly higher had the Unconsolidated
Partnerships been consolidated for the period presented and thus had such fees
(about 9-10% of rental revenue on an aggregate basis) eliminated from
Unconsolidated Partnership expenses.
<TABLE>
<CAPTION>
Unconsolidated Partnerships Quarter Ended Year Year
------------------------------------------ Ended Ended
March 31, June 30, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
1997 1997 1997 1997 1997 1996
-------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Statistical information(1) (2)
-----------------------------
Properties at end of period 408 408 406 392 392 409
Average Units 25,661 25,661 25,576 25,207 25,438 26,162
Average Economic Occupancy 90.6% 91.2% 92.3% 92.8% 91.7% 92.4%
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
Unconsolidated Partnerships Quarter Ended Year Year
----------------------------------------------- Ended Ended
March 31, June 30, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
1997 1997 1997 1997 1997 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Financial Information (000s omitted)(1) (2)
- -------------------------------------------
Revenues
Rental Income $ 29,916 $ 30,198 $ 30,740 $ 31,017 $ 121,871 $ 121,591
Other Property Income 948 1,316 1,624 1,036 4,924 3,574
--------- --------- --------- --------- --------- ---------
Total Revenues 30,864 31,514 32,364 32,053 126,795 125,165
--------- --------- --------- --------- --------- ---------
Expenses
Property Operating and Maintenance 10,985 11,486 11,662 11,504 45,637 44,777
Real Estate Taxes and Insurance 2,932 2,920 2,845 2,928 11,625 11,978
--------- --------- --------- --------- --------- ---------
Operating Expenses 13,917 14,406 14,507 14,432 57,262 56,755
--------- --------- --------- --------- --------- ---------
Net Operating Income 16,947 17,108 17,857 17,621 69,533 68,410
--------- --------- --------- --------- --------- ---------
Interest - Mortgage 9,777 9,786 9,528 9,469 38,560 39,723
Interest - General Partner 3,198 3,176 2,636 3,071 12,081 12,539
Major Maintenance (3) 1,371 2,202 (473) 393 3,493 10,350
Non Operating 724 243 500 82 1,549 2,045
Depreciation and Amortization 4,640 4,649 4,902 4,859 19,050 18,474
--------- --------- --------- --------- --------- ---------
Non Operating 19,710 20,056 17,093 17,874 74,733 83,131
--------- --------- --------- --------- --------- ---------
Inc./(Loss) after Certain Expenses (2,763) (2,948) 764 (253) (5,200) (14,721)
--------- --------- --------- --------- --------- ---------
Capital Expenditures (3) $ 619 $ 988 $ 4,501 $ 3,164 $ 9,272 $ 3,234
========= ========= ========= ========= ========= =========
<FN>
(1) Not "same store" (not all same Properties in operation during all periods presented, includes Properties disposed
of during the year).
(2) Excludes 13 Properties acquired late in quarter ended December 31, 1997.
(3) The Company initiated a revised capitalization program effective January 1, 1997 which requires capitalization of
certain replacement items. In prior years all replacement items were expensed.
Note: See Exhibit 99.1 for Unconsolidated Partnership performance, by property, for all Properties in which the Company
had an ownership interest as of December 31, 1997.
</FN>
</TABLE>
On a comparable unit or "same store" basis for the 392 Unconsolidated
Partnerships in operation throughout all periods presented, Net Operating Income
increased $2.0 million or 3.1% in 1997 as compared to 1996. Economic occupancy
for the 393 same store Unconsolidated Partnerships was 92.1% for 1997, as
compared to 92.6% for 1996. Average rent collected per occupied unit per month
on a same store basis was $429 during 1997 as compared to $420 for 1996. The
Unconsolidated Partnership performance for 1997 as compared to 1996, is
comparable to the Rental Properties, and was influenced by the same factors. In
the third quarter, major maintenance was adjusted to capitalize certain
replacement items previously expensed.
9
<PAGE> 12
The Company's interest income is principally derived from the
Unconsolidated Partnerships. The following table reflects interest income from
Unconsolidated partnerships recognized over the three years ended December 31,
1997.
<TABLE>
000s omitted
---------------------------------------------------------------
Interest Income 1997 1996 1995
------------------ ------------------ -------------------
<S> <C> <C> <C>
Recurring $ 10,681 $ 6,960 $ 4,099
Refinancing 0 1,937 0
------------------ ------------------ -------------------
Total $ 10,681 $ 8,897 $ 4,099
================== ================== ===================
</TABLE>
REAL ESTATE SERVICES BUSINESS
In its Real Estate Services Business the Company provides traditional
property management services to owners of multifamily real estate. These
management services include: day-to-day management and maintenance of apartment
communities; attracting and retaining qualified residents; collecting rents and
other receivables from residents; providing cash management services for rental
revenues, security deposits, taxes, insurance and deferred maintenance escrows;
and compiling and reporting information to property owners. Lexford Properties,
Inc., the Company's wholly owned property management subsidiary, earns fees for
providing such services. LPI's client base included 513 of the 516 Properties in
which the Company had an ownership interest at December 31, 1997. Management
contracts for the Properties are almost all long-term and include incentive fees
for rent collection. LPI's clients also include unrelated third-party owners.
The terms of management contracts for third-party owners ("Third Party
Contracts") vary considerably according to the objectives of the owners, and are
typically subject to termination with 30-day notice. Due to the combination of
controlled and third-party management contracts, the Company expects that the
number of units managed will fluctuate somewhat over time.
Subsequent to December 31, 1997, in connection with the Company's
determination to elect and qualify to be taxed as a REIT, the Company caused LPI
to transfer its rights in third party contracts to Lexford Property Management,
Inc. a newly formed affiliate corporation (see "Recent Developments"). LPI
continues to act as the property manager for substantially all of those
Properties in which the Company maintains an ownership interest.
Through its Real Estate Services Business, the Company also provides
ancillary services such as replacement parts, laundry services and maintenance
to apartment properties in which the Company has an ownership interest. The
Company provides these ancillary services under the trade name "Preferred
Resource Company". Through the "Preferred Vendor" volume-buying program,
Preferred Resource Company offers discounted prices on goods produced or
distributed by manufacturers such as General Electric, Whirlpool, Glidden,
Sherwin-Williams, Sears Roebuck and Co. and Maintenance Warehouse/Home Depot. As
of December 31, 1997, the majority of the Properties participated in the
Preferred Vendor program. Throughout 1997, the Company received a rebate for
every purchase made through the Preferred Vendor program, as well as a rebate
from residents' use of laundry equipment. With the Company's transition to REIT
status, the Company will continue to derive rebate revenues from Preferred
Vendor program purchases made by the Unconsolidated Partnerships; however,
Preferred Vendor program purchases made by the Rental Properties will result in
a savings of property operating and major maintenance expenses. The Company has
been informed by legal counsel that rebates from residents' use of laundry
equipment and/or rentals paid for the use of laundry rooms at the Properties
should constitute "rents from real property" within the meaning of the REIT
provisions of the Internal Revenue Code of 1986, as amended (the "Code").
10
<PAGE> 13
Preferred Resource Company also offers products and services to
residents of apartment communities, including renter's insurance, leased
apartment furnishings, and on a very limited basis, telecommunications and cable
television services. At December 31, 1997, approximately 30% of residents at
apartment communities in which the Company has an ownership interest selected
renters insurance offered through the Company's affiliated insurance agency. The
Company's affiliated insurance agency receives commissions from the sale of
renter's insurance to residents. While the Company has been informed by legal
counsel that commissions received from the sale of renter's insurance will
constitute "non-qualifying REIT income" within the meaning of the Code, the
Company intends to carefully monitor gross revenues derived from each individual
Property as well as renter's insurance commission revenues derived from such
Property in order to ensure that in no event will renter's insurance commissions
ever exceed one percent of the total revenues derived from any individual
Property. Preferred Resource Company also offers leased apartment furnishings
through agreements with national companies such as Aaron Rents, Inc. and Globe
Furniture Rentals, and receives a rebate on furniture packages leased by
residents.
Capitalization of Properties
----------------------------
The Company's investment strategy includes obtaining and maintaining
the best available financing for the Properties, with the goal of maximizing
their operating performance and managing refinancing risk. Over the past five
years, the Company has successfully negotiated long-term, non-recourse, fixed
interest rate financing for approximately 91% of the Properties. The Company
also negotiated and established escrows for property improvements, real property
tax liabilities and working capital as provisions of refinancing.
For a discussion of Property mortgage loans refinanced in 1997, SEE
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION --
LIQUIDITY AND CAPITAL RESOURCES.
COMPETITION
The Properties are largely comprised of apartment units made of solid,
durable modular components pre-manufactured off-site in a quality-controlled
environment. The units were manufactured and shipped to be set on foundations
constructed on-site at the project's final location. The units generally consist
of three or four rooms of uniform design and dimension and are small and
efficient with low-maintenance finishes. The building exteriors feature a
low-pitched asphalt shingle roof, masonite siding and fenced patios. The Company
believes the Properties provide a superior residential alternative to most other
comparably priced apartments and an attractive residential feel through their
mature park-like landscaping, well-maintained lawns and gardens and multiple
building single-story layouts. The average age of the apartment units in the
Portfolio is 14 years.
Lexford's apartment communities generally cater to a "value-conscious"
resident seeking clean, attractive living accommodations without unnecessary
amenities at rental rates below the median rent in relevant housing market. The
Company seeks to serve this segment by maintaining competitively priced rental
rates as represented by its average monthly rents, which currently range from
$400 to $550 per apartment unit, which the Company believes is typically 20-25%
below the average multifamily rental rates in its markets. The Company believes
that the growth and expansion of several cities (including the cities comprising
its "Core Markets" enumerated under "Corporate Strategy" below) toward and
around outer suburbs where a number of the Properties were originally
constructed has resulted in many Properties now being located in very attractive
areas and desirable neighborhoods when compared to similarly priced apartments.
The average rental rate per unit for the Portfolio at December 31, 1997 was
$433. The Company's Portfolio is diversified across 79 metropolitan areas
throughout the Midwest and Southeast, with concentrations in Florida, Georgia,
Ohio, Indiana, Michigan and Kentucky. The Company's Properties tend to be
located in suburban, secondary and tertiary markets, where the Company competes
locally with other apartment communities.
11
<PAGE> 14
Competition for residents of apartment communities is subject to the
conditions and pricing of individual units, local market conditions, the
location of the apartment community and other factors. The geographic
distribution of the Portfolio reduces the impact of any one set of local
economic conditions on the Company.
The multi-family market is characterized by increasing demand generated
by steady population and job growth, low levels of new apartment construction
and continued strong occupancies. According to the REIS REPORTS and other
nationally recognized market data, the Company's primary markets are projected
to be substantially above the national average in terms of population and job
growth.
The Company will continue to invest in improvements to the Properties
to remain competitive and provide opportunities for increases in rental rates.
In addition, the Company is focusing on training to improve the customer service
skills of its property employees.
BUSINESS STRATEGY
The Company's overall business objective is to maximize the total
return to its shareholders and co-investors through increases in the value of
the Portfolio, cash flows and earnings. The Company believes that this objective
is best achieved by the election of REIT status (which it intends to effect for
fiscal year 1998) and by pursuing a strategy of being the leading provider of
housing to "value-conscious" renters. Accordingly, the Company intends to focus
on core markets where it maintains and establishes substantial market share, and
to continually strive for increases in operating margins.
Lexford's mission is to become the dominant U.S. provider of housing to
"value conscious" renters. Lexford's strategies to fulfill this mission and
build shareholder value are:
* A focus on core markets where the Company maintains substantial
market share;
* An emphasis on competitive pricing and operating margins as a
low-cost operator; and
* A commitment to rewarding employees for ingenuity and
productivity.
The Company has identified six "core markets" where it has strong
market share: Atlanta, Georgia; Columbus, Ohio; Indianapolis, Indiana; Miami,
Florida; Orlando, Florida; and Tampa, Florida. The Company intends to expand
within these markets by synergistic and opportunistic investing in apartment
communities that complement its "value-conscious" resident profile. The Company
will also pursue external growth through acquisitions in markets with the
potential to develop into new core markets, and through acquisitions of, or
co-investment in, portfolios of apartment communities.
The Company will strive to increase operating margins through its
emphasis of onsite property management. The Company believes there are
significant opportunities to improve the profitability of individual Properties.
Increase Revenues at Existing Properties. The Company will continue to
seek to increase rental rates by embarking on a capital expenditure program over
the next five years. The Company historically has been able to effectuate
meaningful rental rate increases following expenditures on deferred maintenance
and capital improvements. For example, the performance of the Properties where
improvements were effected following recent mortgage loan refinancings has
improved dramatically with revenues from such Properties increasing 16.3% from
1995 through 1997. Following thorough analysis of the Properties and the
sensitivities to rent increases in their respective locales, management has
identified 224 Properties (approximately 15,000 units) for which it believes
disciplined capital spending will yield substantial revenue increases and
attractive returns on investments. Subject to available financing, the Company
expects to invest approximately $43.0 million in excess of its targeted $350 per
unit annual maintenance spending level for various revenue-enhancing projects at
such Properties over the next five years.
The Company believes that it is uniquely positioned to identify required
improvements, and achieve favorable pricing on these improvements, because of
the homogeneous nature of the Properties and the Company's extensive database of
historical capital improvements. The homogeneity of the Company's apartments
enables the Company to accurately assess useful lives of all major components
12
<PAGE> 15
(i.e. roofs, appliances, painting, asphalt, etc.) and the Company's database of
historical capital expenditures by Property, component and year of replacement
provides the Company with a useful tool to accurately forecast capital
expenditures, and thus budget appropriate replacement reserves.
Leverage Operating Efficiencies. The Company emphasizes on-site property
management and believes there are significant opportunities to improve the
profitability of individual Properties. Particular attention is paid to
opportunities to increase rents, raise occupancy rates and control costs, with
property managers being rewarded for monitoring and reacting to market trends.
Since the Company's acquisition of LPI in August 1996, LPI personnel have
assumed responsibility for managing all of the Properties, and in doing so have
brought to the Company their collective experience and high standards for
personnel, training and management systems.
The Company believes that the durability and uniformity of its Properties
provide for economies and efficiencies in operating and maintenance costs. The
Company seeks to manage expenses through a system of detailed management
reporting and accountability. The Company also expects to realize significant
expense reductions as a result of the Consolidation Program, which eliminates
the costly and cumbersome reporting (both tax and financial), communication and
in many instances, cash segregation required to administer over 400 limited
partnerships with more than 7,000 third party limited partners. The Company may
further seek to control expenses through investment in cost-saving initiatives
such as national contracting, implementation of improved technology, and the
installation of individual apartment unit water and utility meters in certain
locations. With its relatively low operating and maintenance costs, the Company
can offer very competitive rents and still maintain attractive operating
margins.
Increase FFO Through Deleveraging. The Company intends to prepay mortgage
indebtedness secured by the Rental Properties. The Company expects that these
actions will significantly increase FFO and Cash Available for Distribution,
reduce the Company's consolidated debt-to-market capitalization ratio to a level
more consistent with other comparable publicly traded REITs, lower the Company's
aggregate cost of capital (by eliminating higher cost mortgage indebtedness) and
enhance borrowing capacity to fund future acquisitions and capital expenditures.
The Company will seek to raise capital to pay mortgage indebtedness of
approximately $174.8 million secured by 135 Rental Properties which by its terms
is prepayable without substantial penalty or premium (collectively the
"Prepayable Debt"). If successful, following such payment and after giving full
effect to the acquisition of the entire equity interest in 326 Properties
subject to the Consolidated Program, the Company will have approximately $342.2
million of mortgage indebtedness remaining on the Rental Properties of which
$99.3 million becomes prepayable in 1998, $107.5 million in 1999, $102.2 million
in 2000 and $17.3 million in 2001, with weighted average interest rates of
8.81%, 8.62%, 8.90% and 8.54%, respectively. The Company intends to further
reduce its interest expense and therefore increase FFO and Cash Available for
Distribution by retiring such indebtedness as it becomes prepayable, subject to
the availability of capital at pricing which makes prepayment desirable.
Acquisitions. The Company expects to grow by acquiring individual
apartment properties or portfolios of properties and believes such growth will
result in improved economies of scale and increased cash flows and
profitability. The Company believes that it is well-positioned to take
advantage of consolidation opportunities in the value-conscious segment of the
apartment industry which, when compared to the more active consolidation and
acquisition trends occurring in the high middle and upper income segments, have
yet to be realized. The Company believes it is also well positioned to acquire
and manage apartment communities with smaller numbers of units. The Company
believes that there is less competition among REITs for both properties within
the value-conscious segment and properties containing less than 150 units, and
therefore, that such properties can be acquired at attractive prices. The
Company believes it has developed the management expertise necessary to compete
in this segment effectively and achieve attractive financial returns on newly
acquired properties. In addition, the Company believes it can improve the
profitability of such properties through revenue enhancement and cost reduction
since many of these properties are owned by parties that are either
inadequately capitalized or lack the professional property management expertise
of the Company.
13
<PAGE> 16
ITEM 2. PROPERTIES
----------
The Company maintains ownership interests in the Rental Properties and
the Unconsolidated Partnerships (SEE ITEM 1. "BUSINESS").
The Company's executive offices are located in a 6,158 square-foot
suite in the Huntington Center at 41 South High Street, in downtown Columbus,
Ohio.
The Company also has corporate offices for 36,120 square feet of space
within a single-story office building at 6954 Americana Parkway, in suburban
Columbus, Ohio. The Company entered into a lease for the building with Americana
Investment Company (an entity affiliated with an outside director of the Company
- - SEE PART III ITEM 13: "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS") in
late 1992. This lease expired in October 1997 and was extended on a month to
month basis beginning November 1, 1997. Management believes that the lease terms
are competitive with commercial lease rates in the suburban Columbus market.
LPI's corporate headquarters are located in a 15,185 square-foot suite
of offices located in an office park at 8615 Freeport Parkway in suburban
Dallas, Texas. LPI entered into a lease for the office suite in 1993. In
addition to the corporate headquarters, the Company leases regional operations
offices in Orlando, Florida; Seattle, Washington; and in Houston and San
Antonio, Texas.
ITEM 3. LEGAL PROCEEDINGS
-----------------
On March 7, 1996, the Company filed suit against Hartford Fire
Insurance Company ("Hartford") in the United States District Court for the
Middle District of Florida, in a case captioned CARDINAL REALTY SERVICES, INC.
V. HARTFORD FIRE INSURANCE CO., Case No. 96-458-CIV T-24A. In that case, the
Company seeks to recover from Hartford, pursuant to an excess property insurance
policy issued to the Company by Hartford, for termite-related losses at
approximately 150 Properties in which the Company holds (or formerly held) an
interest. The termite related losses are the same as those which formed the
subject matter of prior litigation against the Company's former primary
insurance carrier, National Union Fire Insurance Company in which the Company
arrived at a mutual settlement. Hartford's insurance policy provides coverage
for such losses to the extent they constitute a "single occurrence" within the
meaning of the policy and exceed $25 million. The Company has been unsuccessful
in its efforts to arrive at a settlement of its claim in this proceeding in an
amount that the Company believes to be reasonable. A trial was commenced in
Tampa, Florida in February 1998; however, after one week of trial proceedings
the Visiting Judge presiding over the trial became ill and the U.S. District
Judge declared a mistrial. A new trial has been tentatively scheduled for
September 1998.
The Company is party to a number of other litigation matters arising in
the ordinary course of business, none of which is material or represents any
significant potential impact upon the Company or its financial condition.
14
<PAGE> 17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
---------------------------------------------------------------------
In 1997 and 1996, the Company's common stock traded on the National
Market tier of the Nasdaq Stock Market sm under the trading symbol "CRSI." On
December 31, 1997, there were approximately 1,338 registered holders of the
Company's Common Stock. The following table sets forth the high and low sale
prices of the Common Stock for the periods indicated as adjusted for the two for
one share exchange in connection with the merger of Lexford, Inc. with and into
the Company.
<TABLE>
<CAPTION>
1997 1996
----------------------- -----------------------
High Low High Low
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
First Quarter $ 13.38 $ 10.25 $ 9.38 $ 8.75
Second Quarter 13.00 11.63 10.88 8.75
Third Quarter 14.13 10.94 10.38 9.25
Fourth Quarter 17.25 13.57 10.63 9.69
</TABLE>
The Company's transfer agent is:
Fifth Third Bank
Fifth Third Center
38 Fountain Square
MD 1090D2
Cincinnati, Ohio 45263
The Company has paid no dividends since it became a public reporting
company. Until August 1995, the Company's ability to pay dividends was subject
to a prohibition contained in its financing arrangements with The Huntington
National Bank. The terms of the Company's current credit facility provided by
The Provident Bank no longer restricts dividends. (SEE ITEM 7. "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
LIQUIDITY AND CAPITAL RESOURCES.")
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
The information below should be read in conjunction with the
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO AND ITEM 7 - "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
The unaudited tables set forth below provide a variety of statistical
information about the Company. The Company believes that earnings before
interest, income taxes, depreciation, amortization and extraordinary items
("EBITDA"), Recurring EBITDA (EBITDA less Loan Fees and as adjusted for
Nonrecurring items) and Adjusted EBITDA (Recurring EBITDA plus principal
payments on account of receivables received from Unconsolidated Partnerships
less interest expense on Rental Property mortgage debt) are significant
indicators of the strength of its results. EBITDA is a measure of a Company's
ability to generate cash to service its obligations, including debt service
obligation, and to finance capital and other expenditures, including
expenditures for acquisitions. EBITDA does not represent cash flow as defined by
GAAP and does not necessarily represent amounts of cash available to fund the
Company's cash requirements.
15
<PAGE> 18
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
1997(1) 1996(1) 1995 1994 1993
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Operating Revenue $ 70,367,491 $ 65,300,990 $ 23,676,429 $ 22,600,025 $ 16,064,076
============= ============= ============= ============= =============
Income before Extraordinary Item $ 3,386,112 $ 5,370,230 $ 4,292,713 $ 3,943,943 $ 229,049
Extraordinary Item $ (180,534) $ (1,614,356) $ 804,022 $ 3,155,901 $ 1,050,086
------------- ------------- ------------- ------------- -------------
Net Income $ 3,205,578 $ 3,755,874 $ 5,096,735 $ 7,099,844 $ 1,279,135
============= ============= ============= ============= =============
EBITDA(2) $ 26,528,887 $ 29,530,914 $ 24,599,501 $ 24,752,196 $ 19,887,705
============= ============= ============= ============= =============
Adjusted EBITDA(2) $ 18,720,209 $ 11,990,697 $ 8,212,539 $ 6,850,341 $ 4,189,385
============= ============= ============= ============= =============
<CAPTION>
Basic Earnings Per Share:
<S> <C> <C> <C> <C> <C>
Income before Extraordinary Item $ 0.42 $ 0.71 $ 0.59 $ 0.56 $ 0.03
Extraordinary Item (0.02) (0.21) 0.11 0.45 0.15
------------- ------------- ------------- ------------- -------------
Net Income $ 0.40 $ 0.50 $ 0.70 $ 1.01 $ 0.18
============= ============= ============= ============= =============
Diluted Earnings Per Share:
Income before Extraordinary Item $ 0.41 $ 0.69 $ 0.56 $ 0.52 $ 0.03
Extraordinary Item (0.02) (0.21) 0.11 0.42 0.14
------------- ------------- ------------- ------------- -------------
Net Income $ 0.39 $ 0.48 $ 0.67 $ 0.94 $ 0.17
============= ============= ============= ============= =============
<CAPTION>
Balance Sheet Data: (At period end)
<S> <C> <C> <C> <C> <C>
Total Assets $ 241,597,596 $ 245,367,779 $ 239,398,900 $ 236,729,107 $ 243,969,706
Long-Term Debt 149,998,556 163,319,285 170,111,869 168,159,368 179,816,494
Shareholders' Equity 74,846,496 62,509,178 51,246,094 43,248,143 31,684,299
<FN>
The earnings per share amounts prior to 1997 have been restated as required to comply with Statement of Financial
Accounting Standards No. 128, Earnings Per Share. For further discussion of earnings per share and the impact of
Statement No. 128 SEE NOTE 1 TO NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. The earnings per share amounts
prior to 1997 have also been restated for the two for one share exchange (SEE NOTE 14 TO NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS).
(1) The Company, during 1995 and prior years, classified the Rental Properties as Held for Sale. While the Rental
Properties were Held for Sale, the results of operations from the Rental Properties were credited to the carrying
value of the real estate and no revenues, expenses or depreciation were included in the Consolidated Statements of
Income. Commencing in 1996, the Company changed the classification of the Rental Properties and fully consolidated
the operations of the Rental Properties in the Company's Consolidated Statement of Income (SEE NOTES 1 AND 2 TO
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS).
(2) EBITDA and Adjusted EBITDA for the years ended December 31, 1995, 1994 and 1993 includes the funds from operations
of the Rental Properties during the period such Properties were Held for Sale (SEE ITEM 1 - "BUSINESS - FUNDS FROM
OPERATIONS").
</FN>
</TABLE>
16
<PAGE> 19
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------
INTRODUCTION
The following discussion should be read in conjunction with the
Company's Consolidated Financial Statements and Notes thereto (SEE ITEM 1 -
"BUSINESS" AND NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS).
RESULTS OF OPERATIONS
Comparison of Results of Operations for the Years ended December 31, 1997 and
1996
RENTAL REVENUES are derived from the apartment communities that
comprise the Company's Rental Properties. Revenues increased approximately
$574,000, or 1.4%, in 1997 as compared to 1996. The increase was primarily due
to the increase in average rent collected from occupied units from $420 in 1996
to $429 in 1997. The average economic occupancy of the 111 Rental Properties in
operation at all times during 1996 and 1997 was 92.4% in 1996 compared to 91.6%
in 1997. Economic occupancy is defined as the amount of revenue collected from
residents as a percentage of the revenue a property could generate if full rents
for all units were collected.
FEE BASED REVENUES are comprised of Property Management Services and
Investment Management revenues generated from services provided to Properties
and residents at the Properties. Property Management Services revenues
principally relate to property management and accounting services provided to
the Properties. Preferred Resource (formerly referred to as Ancillary Services
or Preferred Vendor) revenues include a portion of discounts earned by the
Properties for assisting in the acquisition of needed parts and supplies and
managing a coordinated buying group in 1997. In prior years, the Company was
involved in direct sales of parts and supplies to the Properties. In addition,
revenue is generated from renters insurance and other services provided to
residents. Investment Management revenues consist of partnership administration
fees as well as loan refinancing and restructuring fees.
The following are the major components of Management Services Revenues
and Investment Management Revenues for 1997 as compared to 1996 (certain amounts
previously reported have been reclassified herein between Management Services
and Preferred Resource for all periods presented):
<TABLE>
<CAPTION>
1997 1996
---------------- ----------------
<S> <C> <C>
Management Services:
Property Management Services:
Unconsolidated Partnerships $ 7,794,319 $ 7,782,722
Third Party 4,269,553 2,135,429
Other Management Service Fees 1,549,996 1,513,287
Preferred Resource:
Furniture Leasing and Renter=s Insurance 243,867 403,704
Preferred Resource Purchase Rebates 302,811 0
Resident Applications Fees 421,564 399,725
Replacement and Maintenance Material Revenues - Net 0 45,676
---------------- ----------------
Total Management Services Revenues 14,582,110 12,280,543
---------------- ----------------
Investment Management:
Partnership Administration and Other Fees 1,134,412 1,131,775
Loan Refinancing and Restructuring Fees 130,510 751,994
---------------- ----------------
Total Investment Management Fee Revenues 1,264,922 1,883,769
---------------- ----------------
Total Fee Based Revenues $ 15,847,032 $ 14,164,312
================ ================
</TABLE>
17
<PAGE> 20
Fee Based Revenues increased approximately $1.7 million, or 11.9%, in
1997 as compared to 1996. The increase was primarily due to the inclusion in
1997 of a full year of revenues from the operations of Lexford Properties, a
third party property management company, which was acquired on August 1, 1996
(SEE NOTE 1 TO NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - "LEXFORD
PROPERTIES ACQUISITION"). The approximate $160,000 decrease in income derived
from Furniture Leasing and Renter's Insurance activities from 1996 to 1997 was
more than offset by approximately $303,000 of income generated from the volume
discount/rebate program instituted by the Company in 1996 in connection with
purchases by the Properties. The substantial completion of major debt
refinancing efforts by the Company in 1996 resulted in the decrease of
approximately $621,000 in Loan Refinancing and Restructuring Fees.
Fee Based and Rental Revenues are dependent to a certain extent on the
financial condition of the Properties owned and managed by the Company and the
Company's ability to retain its ownership interests. Loss of these interests,
due to an increase in interest rates or an inability to refinance matured loans,
could have a material adverse impact on Revenues and the financial condition of
the Company. In addition, the Company derives its third party property
management revenues from 30 day cancelable contracts. Therefore, the amount of
revenue generated from third party management contracts may be subject to
significant fluctuation from period to period.
Fee Based and Rental Revenues are also directly related to the
occupancy and level of rents collected at the properties managed by the Company.
For the past three years the Company has maintained occupancy, on average, above
90% at the properties managed by the Company. The Company's ability to obtain
rental increases and maintain occupancy are highly dependent upon market
conditions, the physical condition of the properties and the competitive
environments affecting such properties. The Properties are subject to all
operating risks common to residential apartments in general. Such risks include:
competition from other apartments; excessive building of comparable properties
or increases in unemployment in the areas where the apartment communities are
located, any of which might adversely affect apartment occupancy or rental
rates; increases in operating costs due to inflation and other factors, which
increases may not necessarily be offset by increased rents; the inability or
unwillingness of residents to pay rent increases; and future enactment of rent
control laws or other laws regulating multi-family housing, including present
and possible future laws relating to access by physically impaired persons.
INTEREST INCOME increased $1.8 million, or 20%, in 1997 compared to
1996. Interest Income is primarily derived from the interest collected or
accrued on the recorded value of investments in, and advances to, Unconsolidated
Partnerships. (SEE NOTE 3 TO NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS).
The increase in interest income derived from cash generated by property
operations was approximately 53% over the same periods, as approximately $1.9
million of 1996 Interest Income was generated from the excess proceeds derived
from refinancing of Unconsolidated Partnerships (SEE "LIQUIDITY AND CAPITAL
RESOURCES" -- FINANCING AND DEBT RESTRUCTURING OF THE PROPERTIES). Although the
interest income generated from excess refinance proceeds is not recurring,
Interest Income was favorably impacted in 1997, and may be favorably impacted in
the future, by the lower debt service as a result of the refinancing
transactions completed in 1996 and prior years. The increase in 1997 was a
result of improved cash flow due to improved operating performance of the
Unconsolidated Partnerships and lower debt service requirements on mortgage debt
refinanced in prior years.
INCOME FROM DISPOSAL OF ASSETS -- NET, increased approximately $1.0
million, or 106.6%, in 1997 as compared to 1996. This income is derived from the
net disposition proceeds in excess of the aggregate recorded value of these
assets. Additional income from the disposal of assets may be recognized in the
future although it is not a significant long term source of revenue for the
Company.
18
<PAGE> 21
PROPERTY OPERATING AND MAINTENANCE expense decreased approximately $2.1
million in 1997 as compared to 1996. The majority of the decrease is due to the
capitalization of certain furniture and fixture replacements previously
expensed. In the third quarter of 1997, management reviewed its replacement
maintenance costs and determined that certain expenditures had a longer useful
life and did not require as frequent replacement. These items will now and in
the future be capitalized and depreciated over an estimated useful life of five
years. Management believes that the revised capitalization policy (which by
virtue of a third quarter adjustment has been applied effective as of January 1,
1997) is more like that of its industry peers, most of which are Real Estate
Investment Trusts ("REITs"). The Company has announced its intention to qualify
as a REIT for federal income tax purposes for fiscal year 1998.
REAL ESTATE TAXES AND INSURANCE expense remained relatively constant
and decreased approximately $88,000, or 2.1%, in 1997 as compared to 1996.
PROPERTY MANAGEMENT EXPENSES increased approximately $3.0 million in
1997 as compared to 1996. The increase was primarily related to the inclusion in
1997 of a full year of expenses for the third-party management operations of
Lexford Properties, which was acquired effective August 1, 1996.
ADMINISTRATION EXPENSES increased approximately $416,000 in 1997
compared to 1996. The increase in administration expenses was due, in part, to
the executive and middle management restructuring implemented at the end of 1995
which resulted in lower payroll expense during the first half of 1996 due to
open positions, principally at the senior management level, many of which
positions have since been filled. The Company also incurred additional costs of
approximately $253,000 in 1997 associated with a promotional and marketing
campaign designed to promote the Lexford Properties third party property
management operation and the Company's name change in October 1997.
PERFORMANCE EQUITY PLAN expense represents the non-cash charge recorded
upon the vesting of 424,000 shares under the 1997 Performance Equity Plan which
was approved by the Company's shareholders at the 1997 annual meeting. An
additional 212,000 shares issued under such Plan remain subject to forfeiture
unless vesting criteria are satisfied during or prior to fiscal year 1999.
NONRECURRING COSTS in 1997 of $827,000 were up from $243,000 in 1996.
Approximately $400,000 of the charge was due to costs related to the elimination
of overlapping functions between Lexford Properties and the Company's previous
management services operations. In the second half of 1997 the Company recorded
a charge of approximately $427,000 primarily related to costs incurred for the
Form S-11 filing for the proposed spinoff of the Company's Rental Properties.
The Company has withdrawn this filing as it has determined to maintain its
ownership interests in the Rental Properties and seek to qualify as a REIT under
the Internal Revenue Code.
INTEREST EXPENSE on mortgages on the Rental Properties decreased
approximately $362,000 in 1997 as compared to 1996. The decrease in interest
expense was due to the refinancing transactions completed in late 1996. Interest
expense on the Company's corporate lines of credit decreased approximately
$441,000 in 1997 compared to 1996. The decrease is due to lower outstanding
balances on the lines: $7.4 million was outstanding at December 31, 1997,
compared to $15.3 million at December 31, 1996. (SEE "LIQUIDITY AND CAPITAL
RESOURCES").
19
<PAGE> 22
DEPRECIATION AND AMORTIZATION EXPENSE increased approximately $1.0
million in 1997 as compared to 1996. The increase is due to the amortization of
goodwill and management contracts associated with the Lexford Properties
acquisition and depreciation associated with the items capitalized as discussed
above in "Property Operating and Maintenance". In addition, in 1997 the Company
recorded a charge of approximately $364,000 as an amortization adjustment to the
value assigned to the third party management contracts acquired in 1996. The
adjustment was based upon the significant decline in the number of third party
property management contracts.
INCOME BEFORE EXTRAORDINARY ITEM decreased from $5.4 million in 1996 to
$3.4 million in 1997. The Extraordinary charge in 1997 of approximately
$181,000, and in 1996 of $1.6 million, net of taxes, were both a result of
mortgage debt refinancing on certain Rental Properties (SEE NOTE 6 TO NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS AND "LIQUIDITY AND CAPITAL RESOURCES" -
FINANCING AND DEBT RESTRUCTURING OF THE PROPERTIES). Both Income before
Extraordinary Item and Net Income were negatively impacted by the non-cash
charge recorded upon the vesting of 424,000 shares under the Company's 1997
Performance Equity Plan, as discussed above under "Performance Equity Plan."
Before giving effect to that charge, Net Income for 1997 would have increased
86.9% over 1996. After the charge, 1997 Net Income declined about $550,000, or
14.7%, to $3.2 million, from $3.8 million in 1996. In addition, Earnings Per
Share calculations were significantly impacted by the Performance Equity Plan
and the vesting of awards of shares under employment agreements and other
incentive plans. Before giving effect to the charge for the Performance Equity
Plan and the dilutive effect of the associated shares, Basic and Diluted
Earnings Per Share would have been $.88 and $.86, respectively, an increase of
76% and 79% over 1996. After the charge and dilutive effect of the shares, Basic
and Diluted Earnings Per Share for 1997 were $.40 and $.39, respectively, from
$.50 and $.48, respectively for 1996.
Comparison of Results of Operations for the Years ended December 31, 1996 and
Pro Forma 1995
The financial statements for the year ended December 31, 1995 does not
include the results of operations (revenues or expenses) attributable to the
Rental Properties previously classified as "Real Estate Assets Held for Sale".
Commencing January 1, 1996 the Results of Operations, including depreciation of
the Rental Properties, have been included in the Consolidated Statements of
Income. Therefore, the Consolidated Statement of Income for the year ended
December 31, 1996 is not comparable to the Consolidated Statement of Income for
the year ended December 31, 1995.
In order to facilitate the comparison of operations in 1996 to prior
years, the following "pro forma" Income Statement (the "Pro Forma Income
Statement") has been prepared for the year ended December 31, 1995 as if the
Rental Properties were previously consolidated. All intercompany transactions
have been eliminated. Depreciation expense for the Rental Properties has been
estimated for 1995 (SEE NOTES 1 AND 2 TO NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS).
The following discussion of Results of Operations for the year ended
December 31, 1996 as compared to 1995 is based upon the Pro Forma Income
Statement. The earnings per share amounts have been restated as required to
comply with Statement of Financial Accounting Standards No. 128, Earnings Per
Share. For further discussion of earnings per share and the impact of Statement
No. 128 (SEE NOTE 1 TO NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS). The
earnings per share amounts have also been restated for the two for one share
exchange (SEE NOTE 14 TO NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS).
20
<PAGE> 23
<TABLE>
<CAPTION>
1996 Unaudited
Pro Forma
1995
------------ ------------
<S> <C> <C>
Revenues:
Rental Revenues .................................. $ 41,276,684 $ 39,375,333
Fee Based ........................................ 14,164,312 12,540,900
Interest, Principally from Unconsolidated Partnerships 8,897,233 4,099,329
Income from Disposal of Assets-Net ................... 962,761 3,408,379
------------ ------------
65,300,990 59,423,941
------------ ------------
Expenses:
Property Operating and Maintenance ............... 16,980,888 17,970,976
Real Estate Taxes and Insurance .................. 4,148,545 4,006,814
Property Management .............................. 9,366,777 6,910,228
Administration ................................... 5,030,967 4,399,349
Nonrecurring Costs ............................... 242,899 1,537,073
Interest - Non Recourse Mortgages ................ 14,131,780 13,549,258
Interest - Corporate Debt ........................ 1,098,333 1,522,087
Depreciation and Amortization .................... 5,514,571 5,261,181
------------ ------------
56,514,760 55,156,966
------------ ------------
Income Before Income Taxes and Extraordinary Item .... 8,786,230 4,266,975
Provision for Income Taxes ........................... 3,416,000 1,664,000
------------ ------------
Income before Extraordinary Item ..................... 5,370,230 2,602,975
Extraordinary Item, net of Income Taxes .............. (1,614,356) 804,022
------------ ------------
Net Income ........................................... $ 3,755,874 $ 3,406,997
============ ============
EBITDA (Unaudited) ................................. $ 29,530,914 $ 24,599,501
============ ============
Adjusted EBITDA (Recurring EBITDA reduced by
interest on Rental Property Debt) (Unaudited) ...... $ 11,990,697 $ 8,212,539
============ ============
Basic Earnings Per Share:
Income Before Extraordinary Item ........... $ .71 $ 0.36
Extraordinary Item ......................... (0.21) 0.11
------------ ------------
Net Income ................................. $ 0.50 $ 0.47
============ ============
Diluted Earnings Per Share:
Income Before Extraordinary Item ........... $ .69 $ 0.34
Extraordinary Item ......................... (0.21) 0.11
------------ ------------
Net Income ................................. $ 0.48 $ 0.45
============ ============
</TABLE>
21
<PAGE> 24
RENTAL REVENUES are derived from the apartment communities that
comprise the Company's Rental Properties. Revenues increased $1.9 million, or
4.8%, in 1996 as compared to 1995. The increase was primarily due to the
increase in average rent collected from occupied units from $399 in 1995 to $420
in 1996. The average economic occupancy of the 108 Rental Properties in
operation at all times during 1996 and 1995 was 92.5% in 1996 compared to 91.8%
in 1995. Economic occupancy is defined as the amount of revenue collected from
residents as a percentage of the revenue a property could generate if full rents
for all units were collected.
FEE BASED REVENUES are comprised of Property Management Services and
Investment Management revenues generated from services provided to Properties
and residents at the Properties. Property Management Services revenues
principally relate to property management and accounting services provided to
the Properties. Preferred Resource (formerly referred to as Ancillary Services
or Preferred Vendor) revenues consist principally of revenue generated from the
sale of replacement and maintenance material to the Properties. In addition,
Ancillary Services revenues include revenue generated from furniture leasing and
renters insurance services provided to residents. Investment Management revenues
consist of partnership administration fees as well as loan refinancing and
restructuring fees.
The following are the major components of Management Services Revenues
and Investment Management Revenues (unaudited) for 1996 as compared to pro forma
1995 (certain amounts previously reported have been reclassified herein between
Management Services and Preferred Resource for all periods presented):
<TABLE>
<CAPTION>
1996 1995
--------------- ---------------
<S> <C> <C>
Management Services:
Property Management Services:
Unconsolidated Partnerships $ 7,782,722 $ 7,414,992
--------------- ---------------
Third Party 2,135,429 0
Other Management Service Fees 1,513,287 1,805,967
Preferred Resource:
Furniture Leasing and Renter=s Insurance 403,704 290,937
Resident Application Fees 399,725 429,134
Replacement and Maintenance Material Revenues-Net 45,676 532,315
--------------- ---------------
Total Management Services Revenues 12,280,543 10,473,345
--------------- ---------------
Investment Management:
Partnership Administration and Other fees 1,131,775 1,181,540
Loan Refinancing and Restructuring Fees 751,994 886,015
--------------- ---------------
Total Investment Management Fee Revenues 1,883,769 2,067,555
--------------- ---------------
Total Fee Based Revenues $ 14,164,312 $ 12,540,900
=============== ===============
</TABLE>
Fee Based Revenues increased approximately $1.6 million, or 12.9%, in
1996 as compared to 1995. The increase was primarily due to the acquisition of
Lexford Properties, a third party property management company, which generated
$2.1 million in Fee Revenue since its acquisition on August 1, 1996 (SEE NOTE 1
TO NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - "LEXFORD PROPERTIES
ACQUISITION"). The increase in property management revenues was offset by an
approximately $487,000 decrease in replacement and maintenance material sales to
Unconsolidated Partnerships. The decline in replacement and maintenance material
sales occurred as the Company transitioned from a warehouse operation to a
coordinated buying group for replacement and maintenance material. Revenue in
the future will be derived from a portion of the volume discounts generated by
the property purchases.
22
<PAGE> 25
INTEREST INCOME increased $4.8 million, or 117%, in 1996 compared to
1995. Interest Income is primarily derived from the interest collected or
accrued on the recorded value of investments in, and advances to, Unconsolidated
Partnerships. (SEE NOTE 3 TO NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS).
Approximately $1.9 million of the increase was generated from the excess
proceeds derived from refinancing of Unconsolidated Partnerships (SEE "LIQUIDITY
AND CAPITAL RESOURCES -- FINANCING AND DEBT RESTRUCTURING OF THE PROPERTIES).
The balance of the increase was a result of improved cash flow due to increased
operating performance of the Unconsolidated Partnerships (a same unit 7.9%
increase in net operating income in 1996 as compared to 1995) and lower debt
service requirements on mortgage debt refinanced in prior years.
INCOME FROM DISPOSAL OF ASSETS -- NET, decreased approximately $2.4
million in 1996 as compared to 1995. This income is derived from the proceeds of
the sale of assets and the recovery of investor notes receivables in excess of
the aggregate recorded value of these assets.
PROPERTY OPERATING AND MAINTENANCE expense decreased approximately
$990,000, or 5.5%, in 1996 as compared to 1995. The decrease was primarily due
to the implementation in 1996 of a capitalization program which resulted in the
capitalization of major building exterior improvements. Previously all items
were expensed. In 1996 approximately $700,000 of improvements were capitalized
that would have been expensed in prior years. In addition, major maintenance
expense decreased approximately $487,000 in 1996 as compared to 1995. The
decrease in 1996 primarily related to major maintenance on Rental Properties
refinanced in 1995 and 1994.
REAL ESTATE TAXES AND INSURANCE expense remained relatively constant
and only increased approximately $142,000, or 3.5% in 1996 as compared to 1995.
PROPERTY MANAGEMENT EXPENSES increased approximately $2.5 million in
1996 as compared to 1995. Approximately $2.0 million of the increase was related
to the third-party management operation of Lexford Properties, which was
acquired effective August 1, 1996.
ADMINISTRATION EXPENSES increased approximately $632,000 in 1996
compared to 1995. The increase was primarily due to bonuses payable to employees
pursuant to the Company's 1996 Incentive Compensation Plan. The incentive
compensation is based upon certain increases in Company profitability. The
percentage increase used as a measurement for the majority of the incentive
compensation is computed net of the cost of such plan. The increase in incentive
compensation in 1996 compared to 1995 is reflective of the significant increases
in profitability achieved in 1996 compared to 1995.
NONRECURRING COSTS in 1996 of $242,899 related to realignments to the
Company's organization to eliminate overlapping responsibilities. The
restructuring in 1996 was a follow up to the restructuring costs incurred in
1995 of $1.5 million. The restructuring costs are primarily comprised of
severance and separation costs.
INTEREST EXPENSE on mortgages on the Rental Properties increased
approximately $582,000 in 1996 as compared to 1995. The increase in interest
expense was due to the refinancing transactions completed in 1996 and 1995.
Although the overall contractual interest rates decreased, interest expense
increased, due to the impact of "Fresh Start" reporting with effective interest
rates applied to the Carrying Value of the mortgages. Interest expense on the
Company's corporate lines of credit decreased approximately $424,000 in 1996
compared to 1995. The decrease is due to lower outstanding balances on the
lines, and the refinancing of the Company's corporate credit lines in August
1995 at more favorable interest rates (SEE "LIQUIDITY AND CAPITAL RESOURCES").
DEPRECIATION AND AMORTIZATION EXPENSE increased approximately $253,000
in 1996 as compared to 1995. The increase is primarily due to amortization
expense related to loan origination costs capitalized in connection with the
refinancing of corporate debt and mortgages on the Rental Properties, combined
with amortization of management contracts and goodwill associated with the
Lexford Properties acquisition.
23
<PAGE> 26
INCOME BEFORE EXTRAORDINARY ITEM increased from $2.6 million in 1995 to
$5.4 million in 1996. The extraordinary charge of $1.6 million, net of taxes was
a result of mortgage debt refinancing on certain Rental Properties (SEE NOTE 6
TO NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND "LIQUIDITY AND CAPITAL
RESOURCES" FINANCING AND DEBT RESTRUCTURING OF THE PROPERTIES). The
extraordinary gain of $804,000 recognized in 1995 was due to debt forgiveness
generated from the debt restructuring and refinancing of mortgages on Rental
Properties. Net income increased from $3.4 million in 1995 to $3.8 million in
1996.
Earnings before Interest, Taxes, Depreciation and Amortization
The Company believes that earnings before interest, income taxes,
depreciation, amortization and extraordinary items ("EBITDA"), Recurring EBITDA
(EBITDA less Loan Fees and as adjusted for Nonrecurring items) and Adjusted
EBITDA (Recurring EBITDA plus principal payments of receivables from
Unconsolidated Partnerships less interest on Rental Property mortgage debt) are
significant indicators of the strength of its results. EBITDA is a measure of a
Company's ability to generate cash to service its obligations, including debt
service obligation, and to finance capital and other expenditures, including
expenditures for acquisitions. EBITDA does not represent cash flow as defined by
GAAP and does not necessarily represent amounts of cash available to fund the
Company's cash requirements. Unaudited EBITDA and the computation of Adjusted
EBITDA for the years ended December 31, 1997, 1996 and 1995 (pro forma because
the rental properties were classified as held for sale in 1995) is as follows:
(000s omitted)
<TABLE>
<CAPTION>
Pro Forma
---------------
1997 1996 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
EBITDA $ 26,529 $ 29,531 $ 24,600
------ --------------- --------------- --------------
Interest Income derived from refinance proceeds 0 (1,936) 0
Income from Disposal of Assets (1,989) (963) (3,408)
Loan Fees (130) (752) (966)
Second Mortgage Principal Amortization 972 0 0
Performance Equity Plan 6,281 0 0
Nonrecurring Costs 827 243 1,537
--------------- --------------- ---------------
Recurring EBITDA 32,490 26,123 21,763
---------------- --------------- --------------- ---------------
Interest on Rental Properties (13,770) (14,132) (13,549)
--------------- --------------- ---------------
Adjusted EBITDA $ 18,720 $ 11,991 $ 8,214
--------------- =============== =============== ===============
</TABLE>
EBITDA decreased $3.0 million, or 10.2%, and Adjusted EBITDA increased
$6.7 million, or 56.1%, in 1997 as compared to 1996. EBITDA increased $4.9
million, or 20.0%, and Adjusted EBITDA increased $3.8 million, or 46.0%, in 1996
as compared to 1995.
24
<PAGE> 27
LIQUIDITY AND CAPITAL RESOURCES
The principal sources of liquidity for the Company are cash flow from
its operations and borrowings available under the Company's credit facility. The
Company's Net Cash Provided by Operating Activities has increased significantly
over the past three years, from approximately $5.6 million in 1995; to
approximately $12.7 million in 1996; to approximately $18.1 million in 1997.
Increases in Interest and Other Revenues received from Unconsolidated
Partnerships has been a major factor in such increase. Interest and Other
Revenues received from Unconsolidated Partnerships, which is primarily comprised
of payments of accrued interest, increased 41.0%, or $3.7 million, in 1997
compared to 1996, and 82.7%, or $4.1 million, in 1996 as compared to 1995. In
1997, 359 Unconsolidated Partnerships provided operating cash flow to the
Company, as compared to 294 in 1996 and 220 in 1995.
The increase in Net Cash Provided by Operating Activities in 1997 was
also due to an increase in operating cash flow from the Rental Properties of
54.8% or $2.5 million in 1997 compared to 1996. The increase was due to the
improved operating performance of the Rental Properties and approximately $1.4
million of replacement furniture and fixtures capitalized in the second half of
1997. In 1995 this operating cash flow was treated as cash flow from investing
activity as the Rental Properties were classified as "Real Estate Assets Held
for Sale" (SEE NOTES 1 AND 2 OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS).
The other factors impacting the Company's cash flow in 1997, 1996 and
1995 are discussed in "Results of Operations" and "Financing and Debt
Restructuring of the Properties".
The Company anticipates that cash flow from its operations and
borrowings available under the Company's credit facility will be adequate to
meet the reasonably foreseeable capital and liquidity needs of the Company. If
the Company is successful in its future growth and capital expenditure plans, it
may be necessary to seek additional capital sources through other debt or equity
sources (SEE ITEM 1- "BUSINESS").
On September 30, 1997 the Company entered into an Amended and Restated
Loan and Security Agreement with The Provident Bank (the "Bank"). The new
revolving credit facility ("Facility") is for $35 million and represents an
increase to and replacement of all former revolving credit facilities with the
Bank. The scheduled term of the Facility expires March 30, 2000, although the
Company may elect from time to time to convert all or any portion of the
principal amount outstanding under the Facility into a five year term loan.
Revolving loans outstanding under the Facility bear interest at a variable
interest rate equal to the Bank's prime rate of interest, currently 8.5%, minus
1%. The Company's former $7.0 million revolving line of credit for acquisitions
and Property debt restructuring (the "Acquisition Line"), was converted into a
term loan which matures in March 2001 and has a 7.25% fixed interest rate with
monthly installments of principal and interest of $139,435. As of the end of
1997, the aggregate unpaid principal balance outstanding under the Facility and
the Acquisition term debt was approximately $7.3 million.
In the first quarter of 1998, the Company reached an agreement
with the Bank to increase the Facility by $5.0 million to $40. 0 million.
In addition, all of the Company and the majority of Property bank
accounts are maintained at the Bank. The banking relationship has increased cash
flow at the Properties as a result of reduced service charges and increased
interest income on the Property bank account balances. The Company benefits from
a portion of the improved cash flow at the Properties.
The Company's corporate capital expenditures for 1997 amounted to
approximately $1.2 million funded from cash flow and the Company's credit
facility. The Company anticipates that its capital needs in the future can be
satisfied out of cash flow from operations or the Company's credit facility. The
Company is upgrading its software systems in order to obtain optimal
efficiencies from technology. In addition, during the course of 1998, the
Company will evaluate implementing technology at the Properties. Capital
Expenditures, combined
25
<PAGE> 28
with Improvement and Replacement Expense for the Rental Properties, was $3.3
million during 1997. These costs are funded from Rental Properties cash flow and
maintenance escrow funds. In 1998 the Company anticipates capital expenditures
of $1.0 million for corporate purposes and approximately $5.1 million for Rental
Properties. The capital expenditures for the Rental Properties is part of a
capital expenditure program the Company is planning for the entire Portfolio
(SEE ITEM 1 BUSINESS - "CORPORATE STRATEGY").
Phase I environmental site assessments have been completed within the
last 36 months for more than one-half of the Properties in connection with
mortgage refinancing transactions. None of the Phase I environmental site
assessments revealed any environmental contaminant or condition that the Company
believes would have a material adverse effect on the Company or the Properties.
Nevertheless, it is possible that there exists material environmental
contamination of which the Company is unaware.
In the year 2000, many existing computer programs that use only two
digits (rather than four) to identify a year in the date field could fail or
create erroneous results if not corrected. This computer program flaw is
expected to affect virtually all companies and organizations. The Company cannot
quantify the potential costs and uncertainties associated with this computer
program flaw at this time, but does not anticipate that the effect of this
computer program flaw on the operations of the Company will be significant. The
Company's major internal computer programs are year 2000 compliant; however, the
Company may be required to spend time and monetary resources addressing any
necessary external year 2000 issues as well as minor internal computer program
changes. The Company does not expect that any such time or monetary resources
will be material.
Lexford Properties Acquisition
- ------------------------------
Effective August 1, 1996, the Company acquired Lexford Properties,
Inc., a privately held, third-party multi-family management company
headquartered in Dallas, Texas (SEE NOTE 1 OF NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS - BUSINESS OVERVIEW - MANAGEMENT SERVICES AND - LEXFORD
PROPERTIES ACQUISITION). As a result of the acquisition, the Company derives
Management Services fee income from apartment communities in which it has no
ownership interest. At December 31, 1997, Lexford Properties' third party
management portfolio comprised 12,005 units of the Company's management
portfolio of approximately 47,900 units. Lexford Properties' Dallas office is
headquarters for the Company's combined property management business, which is
conducted under the Lexford Properties name.
To acquire Lexford Properties, the Company issued 1,400,000 shares of
Common Stock valued, for acquisition purposes, at $10 per share representing a
maximum purchase price of $14 million. Approximately $9 million of the purchase
price (900,000 shares) is subject to forfeiture in the event the Company's
combined property management operations do not achieve certain profitability
criteria. Lexford Properties' shareholders received 500,000 shares of the
Company's Common Stock free of contingencies. The remaining 900,000 contingent
shares will cease to be subject to risk of forfeiture if and when specified
increases in the profitability of the Company's property management operations
are achieved during the three full fiscal years following the merger (i.e. on or
before the end of the Company's 1999 fiscal year). If, during any one of the
three fiscal years in the specified period, profit from property management
operations increases $1.8 million or more from combined 1995 levels, the former
Lexford Properties shareholders would own 300,000 of the contingent shares free
of contingencies, and if the increase is $4.0 million or more from combined 1995
levels, the former Lexford Properties shareholders would own the entire
1,400,000 shares free of contingencies, or approximately 14.9% of the Company's
shares outstanding as of December 31, 1997 (SEE "SUBSEQUENT EVENTS").
Subsequent Events
- -----------------
In December 1997, the Company announced that it would seek to qualify
and elect to be taxed as a REIT in 1998. In connection with this decision, the
Company established a new entity known as Lexford Residential Trust (the
"Trust") and in January 1998 filed a Form S-4 Registration Statement with the
Securities and Exchange Commission relating to the proposed merger of the
Company with
26
<PAGE> 29
and into the Trust. The Trust expects to be taxed as a REIT. On March 3, 1998,
the shareholders of the Company approved the merger of the Company with and into
the Trust. The terms of the merger transaction provide that each share of the
Company's common stock be canceled and converted to two common shares of
beneficial interest in the Trust, resulting in a restatement of the earnings per
share amounts of the Company.
In connection with the Company's decision to elect REIT status, the
Company initiated a plan ("the Consolidation Plan"), the purpose of which was to
minimize third party interests in the entities owning the Unconsolidated
Partnerships. As of March 3, 1998, the Company has acquired the entire third
party ownership interests in 287 Unconsolidated Partnerships (the "Consolidating
Properties"). The Company has made cash payments to former partners of the 287
Unconsolidated Partnerships totaling $21.3 million. The Company intends to
pursue the acquisition of the third party interests in all or a substantial
portion of the remaining Unconsolidated Partnerships at an additional cost of
$10.0 to $15.0 million. The cost of the Consolidation Plan will be funded from
the Company's cash flow and its credit facility. The Consolidation Plan will
significantly change the financial statements of the Company. The Investments in
and Advances to Unconsolidating Partnerships of $57.1 million at December 31,
1997, and the related interest income derived from such investments and Fee
Based Revenue earned from managing the properties will be almost entirely
eliminated as the formerly Unconsolidated Partnerships are consolidated in the
financial statements of the Company. In addition, upon qualification and
maintaining REIT status, the Company will no longer record a provision for
income taxes.
On March 13, 1998, the Company negotiated a settlement with the prior
shareholders of Lexford Properties whereby 300,000 of the 900,000 shares subject
to forfeiture were released in exchange for the forfeiture of the remaining
600,000 shares (SEE NOTE 1 "LEXFORD PROPERTIES ACQUISITION"). The agreement was
a result of the Company's decision to elect REIT status which would impact the
third party management business and the ability of Lexford Properties to achieve
the profitability criteria necessary for the release of the shares subject to
forfeiture. The release of the 300,000 shares will result in a $3.0 million
charge in the first quarter of 1998.
Financing and Debt Restructuring of the Properties
- --------------------------------------------------
In 1997 the Company refinanced mortgages on 14 Unconsolidated
Partnerships and six Rental Properties. The new mortgages on 13 Properties were
financed through PaineWebber Incorporated ("PaineWebber"), the mortgages on two
Properties were financed through First Union Capital Markets Group ("First
Union"), and the mortgages on five Properties were financed through Morgan
Stanley and Co. Incorporated ("Morgan Stanley"). The PaineWebber mortgages have
fixed interest rates ranging from 8.2% to 9.0% with a 25 year principal
amortization schedule, beginning in year four, and a ten year maturity. The new
First Union mortgages have fixed interest rates of 8.7% with a 25 year principal
amortization and a ten year maturity. The Morgan Stanley mortgages have fixed
interest rates of 7.45% with a 25 year principal amortization and a ten year
maturity. An extraordinary non-cash loss of approximately $180,000, net of tax
benefits, resulted from the mortgage debt refinancings of the Rental Properties.
The loss arose from the mortgages repaid from refinance proceeds at the
contractual balance which exceeded the carrying value of the mortgages. The
Company was able to negotiate debt discounts from the previous lenders of
approximately $1.8 million in the aggregate on five of the Unconsolidated
Partnerships. The extraordinary gain resulting from these discounts was recorded
at the partnership level. In addition, annual debt service at the Unconsolidated
Partnerships will decrease in the aggregate, approximately $229,000 per year
over the next three years and approximately $18,000 per year on the Rental
Properties, as a result of these transactions.
In the third quarter of 1997, the Company paid off the mortgage debt on
one Rental Property. The payment of $1.2 million approximated the Carrying Value
of the mortgage and represented a significant discount from the contractual
value of $1.9 million.
In December 1997, the Company entered into a mortgage purchase
agreement with a financial institution wherein the lender agreed to purchase
outstanding mortgage notes with a balance of $4.8 million on certain
Unconsolidated Partnerships. As part of the agreement, the financial institution
has a put option whereby the Company has agreed to purchase the mortgage notes
at a discounted amount of $3.6 million.
27
<PAGE> 30
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
Documents filed as part of this report:
Financial Statements: The Audited Consolidated Balance Sheets of
the Company and Subsidiaries as of December 31, 1997 and 1996, and
the related Consolidated Statements of Income, Shareholders' Equity
and Cash Flows of the Company and Subsidiaries for the years ended
December 31, 1997, 1996 and 1995.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None.
PART III
ITEM 10. TRUSTEES AND EXECUTIVE OFFICERS OF THE REGISTRANT
-------------------------------------------------
(a) TRUSTEES
The Board of Trustees ("Board") of the Company consists of eleven
members. The Company's Bylaws classify the directors into three
classes, with the directors in each class serving for three year
terms and until their successors are elected. The terms of the
directors listed below will expire at the 1998, 1999 and 2000
annual meetings of the Company's shareholders, respectively, as
indicated below.
CLASS I TRUSTEES SERVING UNTIL THE 1999 ANNUAL MEETING
<TABLE>
<CAPTION>
Has Served as
Name Age Trustee Since Principal Occupation and Business Experience
------------------------------- -------- ---------------- --------------------------------------------------------
<S> <C> <C> <C>
Patrick M. Holder 49 1997 Executive Vice President of the Company until
December 12, 1997 and has served as President of LPI
since August 1996. Mr. Holder had previously been
President of Lexford Partners, a Texas joint venture
and manager of multifamily properties and successor
to Brentwood Properties (and the predecessor to LPI)
from 1988 through July 1996. Mr. Holder previously
served as President of Brentwood Properties, a
property management firm, from 1987 to May, 1988.
Robert V. Gothier, Sr. 50 1992 President of RVG Management & Development Company, a
manager and developer of residential and commercial
properties, since 1976 and general partner of Rostan
Associates, a real estate holding company associated
with RVG Management and Development Company, since
1986. Mr. Gothier also is a member of the Harrisburg
Board of Realtors and the Legislative Board of the
Pennsylvania Manufactured Home Association.
</TABLE>
28
<PAGE> 31
<TABLE>
<CAPTION>
Has Served as
Name Age Trustee Since Principal Occupation and Business Experience
------------------------------- -------- ---------------- --------------------------------------------------------
<S> <C> <C> <C>
H. Jeffrey Schwartz 43 1992 Partner in the law firm of Benesch, Friedlander,
Coplan & Aronoff LLP since 1988 and Chairman of the
firm's Business Reorganization Department since
1991. Prior to joining the law firm in 1983, Mr.
Schwartz was a law clerk to the Honorable William J.
O'Neill, United States Bankruptcy Court for the
Northern District of Ohio, from 1982 to 1983 and to
the Honorable Joseph T. Molitoris, United States
Bankruptcy Court for the Northern District of Ohio
from 1980 to 1982. Mr. Schwartz was a faculty member
of the Bankruptcy Litigation Institute, has written
numerous articles on securities, real estate and
business reorganization law and is a former Chairman
of the Section of Bankruptcy and Commercial Law of
the Cleveland Bar Association.
Gerald E. Wedren 61 1992 President of Craig Capital Co., a Washington,
D.C.-based merger and acquisition firm, since 1973.
Mr. Wedren has also been Managing Partner of Tavern
Real Estate Limited Partnership and Wedren
Associates, which own and lease properties in the
Washington and Baltimore area, since 1988. Mr.
Wedren was President of G.E.W., Inc., an owner of
fast food restaurants, from 1981 to 1988; was of
counsel with the Columbus law firm of Brownfield,
Bowen, Bally & Sturtz from 1973 to 1981; and was
Acting Director of the Department of Commerce and
Commissioner of Securities for the State of Ohio in
1971 and 1972. He is a Director of American Eagle
Outfitters, Inc., Marwed Corporation and Tavern
Realty Co.
</TABLE>
29
<PAGE> 32
CLASS II TRUSTEES SERVING UNTIL THE 2000 ANNUAL MEETING
<TABLE>
<CAPTION>
Has Served as
Name Age Trustee Since Principal Occupation and Business Experience
------------------------------- -------- ---------------- --------------------------------------------------------
<S> <C> <C> <C>
Joseph E. Madigan 65 1992 A corporate financial consultant, Mr. Madigan also
is a Director of Skyline Chili, Inc., Donatos Pizza,
Inc., VOCA Holdings, Inc. and The Frank Gates
Service Company. Mr. Madigan currently serves as
Chairman of the Company's Board and served as Acting
Chairman and Chief Executive Officer of Lexford,
Inc. from June 1995 to December 1995. Mr. Madigan
was Executive Vice President, Chief Financial
Officer and Director of Wendy's International, Inc.
from July, 1980 through December, 1987. He was
Treasurer and Vice President of Borden, Inc. between
October, 1968 and June, 1980.
George J. Neilan 62 1992 President of Allstate Development Company, and has
been involved in land acquisition and development in
the Charleston, West Virginia area since 1982. He
also maintains an intellectual property legal
practice in South Charleston, West Virginia.
Glenn C. Pollack 40 1992 Managing Director and Principal of Brown, Gibbons,
Lang & Company, L.P., an investment banking firm
located in Cleveland, Ohio, since January 6, 1997.
Mr. Pollack served as President of Zeus Advisors,
Inc., a consulting firm located in Cleveland, Ohio,
from November 1994 to December 1996. From September
1989 to October 1994, Mr. Pollack was Chief
Executive Officer of A & W Foods, Inc., a regional
food distributor. Mr. Pollack was a senior manager
in the Corporate Strategies Group at the Cleveland
Office of Price Waterhouse in 1988 and 1989, and
served in a similar capacity from 1984 to 1988 with
Siedmann & Associates, a Cleveland-based consulting
firm.
</TABLE>
30
<PAGE> 33
<TABLE>
<CAPTION>
Has Served as
Name Age Trustee Since Principal Occupation and Business Experience
------------------------------- -------- ---------------- --------------------------------------------------------
<S> <C> <C> <C>
Stanley R. Fimberg 63 1997 Managing member of FSC Realty, LLC, a real estate
firm specializing in the ownership of multi-family
properties, since March 1996. Mr. Fimberg served as
President of Fimberg Realty, Inc., a co-venturer of
LPI, a Texas joint venture and manager of
multifamily properties and successor to Brentwood
Properties (and the predecessor to LPI), from May
1988 until July 1996. Mr. Fimberg has devoted his
energies solely to real estate investment activities
since 1970. Prior to that time, Mr. Fimberg served
as an attorney with O'Melveny & Myers and worked in
the Office of the Tax Legislative Counsel of the
U.S. Treasury Department in Washington, D.C.
<CAPTION>
CLASS III TRUSTEES SERVING UNTIL THE 1998 ANNUAL MEETING
Has Served as
Name Age Trustee Since Principal Occupation and Business Experience
------------------------------- -------- ---------------- --------------------------------------------------------
<S> <C> <C> <C>
John B. Bartling, Jr. 40 1995 President and Chief Executive Officer of the Company
since December 1, 1995. From April 1993 until
December 1995, Mr. Bartling was a Director in the
Real Estate Products Group of CS First Boston, an
investment banking firm. He was an executive officer
of NHP, Inc., a company specializing in the
development, ownership and management of real estate
assets, from June 1987 to April 1993. In addition,
Mr. Bartling served as Executive Vice President of
NHP Real Estate Corp., NHP Capital Corp. and NHP
Servicing Inc., wholly owned subsidiaries of NHP,
Inc., from 1991 to April 1993. Mr. Bartling is a
member of the Executive Committee of the National
Multi-Housing Council, where he serves as a member
of its Finance and Joint Legislation Committee.
</TABLE>
31
<PAGE> 34
<TABLE>
<CAPTION>
Has Served as
Name Age Trustee Since Principal Occupation and Business Experience
------------------------------- -------- ---------------- --------------------------------------------------------
<S> <C> <C> <C>
George R. Oberer, Sr. 70 1992 Chairman of the Board and past President and CEO of
Oberer Development Company since the early 1970s. He
was President of the predecessor corporation, Oberer
Construction Company, since 1953. Mr. Oberer is
President and Chief Executive Officer of Oberer
Development Company and Gold Key Realty Company
which are engaged in real estate development and
management.
Robert J. Weiler 62 1992 A central Ohio real estate developer, Mr. Weiler
joined The Robert Weiler Company in 1957 and has
been Chairman of the Board since 1987. A real estate
consultant since 1970, Mr. Weiler also is a licensed
real estate appraiser and a member of the Appraisal
Institute, having served as President of the Ohio
Chapter. Mr. Weiler served as the Company's Acting
President and Chief Operating Officer from June
through December 1995. He was a Director of the
National and Ohio Association of Realtors and is a
past President of the Columbus Board of Realtors.
Mr. Weiler is a member of the Executive Committee of
the Capital University Board of Trustees. He also
served as a member of the Columbus Board of
Education where he served as its President in 1987.
</TABLE>
(b) EXECUTIVE OFFICERS
In addition to John B. Bartling, Jr., Chief Executive Officer and
President and a trustee of the Company, listed below are the executive officers
of the Company as of March 28, 1998. Each executive officer will serve until his
or her successor is selected by the Board or until his or her earlier
resignation or removal. There are no family relationships among these officers.
<TABLE>
<CAPTION>
Name Age Principal Occupation During the Past Five or More Years
- -------------------------------- ------- ------------------------------------------------------------------------------
<S> <C> <C>
Mark D. Thompson 40 Chief Financial Officer and Executive Vice President of the Company
since October 31, 1996. Prior to that time, Mr. Thompson was Executive
Vice President of Corporate Acquisitions of the Company since April 1,
1996. Mr. Thompson was a partner in the law firm of McDonald, Hopkins,
Burke & Haber from January 1995 to April 1996. Prior to that time, Mr.
Thompson was an associate and partner in the law firm of Benesch,
Friedlander, Coplan & Aronoff LLP from January 1985 and October 1992,
respectively.
</TABLE>
32
<PAGE> 35
<TABLE>
<CAPTION>
Name Age Principal Occupation During the Past Five or More Years
- -------------------------------- ------- ------------------------------------------------------------------------------
<S> <C> <C>
Leslie B. Fox 39 Executive Vice President and Chief Operating Officer of the Company
since December, 1997. Prior to that, she had been Executive Vice
President -- Investment Management of the Company since June 1997. Ms.
Fox was President of each of Asset Investors Corporation ("AIC") and
Commercial Assets, Inc. ("CAI"), both publicly traded real estate
investment trusts, from October 1996 through May 1997. Prior to that
time, Ms. Fox served as Executive Vice President and Chief Operating
Officer of CAI and AIC from February 1995 through September 1996. From
November 1993 through February 1995, Ms. Fox served as a Vice President
of AIC and as Executive Vice President, Chief Investment Officer and
Assistant Secretary of CAI. Ms. Fox served as Senior Vice President of
NHP Capital Corp., a subsidiary of NHP, Inc. from December 1991 to
October 1993 and Vice President of Finance/MIS of NHP Property
Management, Inc., a subsidiary of NHP, Inc. from November 1987 to
November 1991.
Bradley A. Van Auken 40 Mr. Van Auken is the Company's Senior Vice President, General Counsel
and Secretary, serving in such capacity for the Company since January
1998. Mr. Van Auken was a partner and associate with the law firm of
Benesch, Friedlander, Coplan & Aronoff LLP from January 1992 and
November 1986, respectively.
Mark M. Culwell 46 Mr. Culwell has served as Senior Vice President -- Asset Management of
the Company since December 1997 and served as Construction Services
Supervisor of LPI from April through December of 1997. Mr. Culwell was
Vice President -- Real Estate Investment and Construction of Cornerstone
Housing Corp., a company engaged in real estate investment and
construction, from October 1991 through March 1997. He was a Southwest
Partner of Trammell Crow Residential from October, 1982 to December,
1986.
Annette Hoover 70 Senior Vice President -- Property Operations since December 1997. Prior
to that time, Ms. Hoover was a Vice President of LPI since August 1,
1996. From 1988 to August 1996, Ms. Hoover was Vice President of Lexford
Partners, a property management firm and the predecessor of LPI prior to
its acquisition by the Company.
Paul R. Selid 35 Senior Vice President--Acquisitions of the Company since December 1997.
Prior to that time, Mr. Selid was a Senior Vice President from April 15,
1996 to December 1997. Mr. Selid was Vice President of Acquisitions of
NHP, Inc. from December 1994 to April 1996. Mr. Selid also served as
Vice President of Asset Management & Underwriting of NHP, Inc. from
September 1992 to December 1994. Mr. Selid previously served as Vice
President of Finance of Hall Financial Group, Inc. from January 1990 to
September 1992.
</TABLE>
33
<PAGE> 36
<TABLE>
<CAPTION>
Name Age Principal Occupation During the Past Five or More Years
- -------------------------------- ------- ------------------------------------------------------------------------------
<S> <C> <C>
Ronald P. Koegler 45 Vice President and Controller of the Company since December 20, 1996.
Mr. Koegler served as Vice President and Treasurer of the Company from
January 16, 1996 to December 20, 1996. Prior to that time, Mr. Koegler
was Controller of the Company since April 1992. He served as Assistant
Controller of the Company from October 1989 to April 1992.
Michael F. Sosh 36 Vice President and Treasurer of the Company since January 9, 1997. Prior
to that time, Mr. Sosh served as Divisional Vice President and Assistant
Treasurer of The Bon-Ton Stores, Inc. since March 1995. He previously
served as Manager of Financial Planning and Financial Analyst of The
Bon-Ton Stores, Inc. from 1987 to 1995. Mr. Sosh was a banking officer
with Meridian Bancorp, Inc. from 1983 to 1987.
</TABLE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of the Company's Common Stock, to
file initial statements of beneficial ownership (Form 3), and statements of
changes in beneficial ownership (Forms 4 or 5) of Common Stock of the Company
with the Securities and Exchange Commission (the "SEC"). Officers, directors and
greater than 10% shareholders are required by SEC regulation to furnish the
Company with copies of all such forms they file.
To the Company's knowledge, based on its review of the copies of such
forms received by it, or written representations from certain reporting persons
that no additional forms were required for those persons, the Company believes
that during the previous fiscal year, all filing requirements applicable to its
officers, directors, and greater than 10% beneficial owners were complied with.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
(a) SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned by the
Company's Chief Executive Officer during 1997 and the other four most highly
compensated executive officers for services rendered in all capacities to the
Company during 1997 as well as 1996 and 1995, where applicable.
34
<PAGE> 37
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------------------------------------------
SECURITIES
OTHER RESTRICTED UNDER-
ANNUAL STOCK LYING
NAME AND SALARY BONUS(ES) COMPENSATION AWARD(S) OPTIONS/
PRINCIPAL POSITION YEAR ($) ($) ($) ($) SARS #
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John B. Bartling, Jr 1997 $ 340,000(1) $ 198,000(2) $ 9,000(3) -- --
Chief Executive Officer 1996 $ 285,000 $ 171,000(6) $ 503,800(7) $ 402,188(8) 40,000(9)
and President 1995 $ 23,750(11) -- $ 13,250(12) -- --
Mark D. Thompson 1997 $ 230,000(13) $ 207,000(14) -- -- --
Chief Financial Officer and 1996 $ 127,885(17) $ 157,491(18) $ 216,635(19) $ 136,875(20) 25,000(21)
Executive Vice President 1995 -- -- -- -- --
Leslie B. Fox 1997 $ 102,981(23) $ 178,125(24) -- $ 180,000(25) 25,000(26)
Chief Operating Officer 1996 -- -- -- -- --
and Executive Vice President 1995 -- -- -- -- --
Michael F. Sosh 1997 $ 105,000 $ 47,250(28) -- -- 5,000(29)
Vice President and Treasurer 1996 -- -- -- -- --
1995 -- -- -- -- --
Ronald P. Koegler 1997 $ 105,000 $ 42,000(32) -- -- 2,500(33)
Vice President and Controller 1996 $ 84,492 $ 38,250(36) -- -- 5,000(37)
1995 $ 75,194 $ 15,450(39) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
LTIP ALL OTHER
NAME AND PAYOUTS COMPENSATION
PRINCIPAL POSITION ($) ($)
- ------------------------------------------------------------------
<S> <C> <C>
John B. Bartling, Jr $1,660,266(4) 6,260(5)
Chief Executive Officer -- $ 7,371(10)
and President -- --
Mark D. Thompson $1,058,968(15) $ 2,400(16)
Chief Financial Officer and -- $ 934(22)
Executive Vice President -- --
Leslie B. Fox -- $ 1,236(27)
Chief Operating Officer -- --
and Executive Vice President -- --
Michael F. Sosh 325,864(30) $ 2,400(31)
Vice President and Treasurer -- --
-- --
Ronald P. Koegler $ 325,864(34) $ 2,400(35)
Vice President and Controller -- $ 6,218(38)
-- $ 5,603(38)
- ---------------------------
<FN>
(1) This amount includes a cash payment of $300,000 and $40,000 Mr. Bartling elected to receive in the form of 4,000 shares of
Common Stock in lieu of cash. The shares of Common stock were issued based on a valuation of $10.312 per share, being the
closing price of the Common Stock on December 31, 1996. Mr. Bartling elected to contribute the shares to the Cardinal
Realty Services, Inc. Executive Deferred Compensation Rabbi Trust.
(2) Cash bonus for 1997 paid in 1998.
(3) Car allowance of $750 per month.
(4) Mr. Bartling received an award of 40,000 restricted shares of Common Stock April 5, 1996, providing that so long as Mr.
Bartling remains in the employ of the Company, one-third of such shares will be earned and will be issued when the average
number of issued and outstanding shares of Common Stock over ten consecutive trading days multiplied by the average closing
price of the Common Stock on the Nasdaq National Market tier of the Nasdaq Stock Market sm over such period (or if the
Common Stock is not listed or admitted to trading on such exchange, the principal securities exchange on which the Common
Stock is listed or admitted to trading) plus the liquidation value of all issued and outstanding preferred stock of the
Company ("Market Capitalization"), exceeds $90 million, one-third of which shall vest when the Market Capitalization
exceeds $120 million, and the final one-third of which shall vest when the Market Capitalization exceeds $120 million, and
the final one-third of which shall vest when the Market Capitalization exceeds $150 million. The terms of the restricted
share grant provides for acceleration upon a change of control of the Company or the termination of Mr. Bartling's
employment other than for cause. Mr. Bartling vested in two thirds, 26,666 of the 40,000 shares, in 1997. The value of the
stock was determined by multiplying the number of shares subject to this grant by the closing price of the Common Stock on
April 5, 1996 which was $8.937. In addition, Mr. Bartling vested in 96,000 shares of restricted stock pursuant to the terms
of the Performance Equity Plan. The value of this stock was determined by multiplying the number of shares subject to this
grant by the closing price of the Common Stock on October 7, 1997, $14.812, the closing price of the Common Stock at the
date of the grant. The value of these vested awards at the end of 1997 fiscal year was $2,115,989 based upon the fiscal
year-end price of $17.25 per share.
</FN>
</TABLE>
35
<PAGE> 38
(5) Includes the Company's payment of a premium in the amount of $3,860 for
a term life insurance policy with a death benefit of $2,000,000 and the
Company's portion of the cost of group term life insurance, health
insurance and disability insurance paid on behalf of Mr. Bartling in
the aggregate amount of $2,400.
(6) This amount includes a cash bonus for 1996 paid in 1997 in the amount
of $27,862. This amount also includes an award of 13,880 shares of
Common Stock as a stock bonus for 1996 granted in 1997. The value of
the stock bonus was determined by multiplying the number of shares
subject to this grant by the closing price of the Common Stock at
fiscal year-end, which was $10.312.
(7) This amount includes an award of 20,000 shares of restricted Common
Stock in 1997 pursuant to the terms of Mr. Bartling's Employment
Agreement with the Company, which states that Mr. Bartling will receive
one share of Common Stock for each share of Common Stock purchased by
him, up to a maximum of 20,000 shares. The value of 20,000 shares
subject to this award was determined by multiplying such shares by the
closing price of the Common Stock on June 10, 1996, the date of his
matching purchase, which was $9.937. In addition, pursuant to an
amendment to Mr. Bartling's Employment Agreement, Mr. Bartling elected
to receive shares of Common Stock in lieu of cash bonus compensation
otherwise payable to him on account of the Company's 1996 fiscal year.
The shares of Common Stock were issued based on a valuation of $10.312
per share, being the closing price of the Common Stock on December 31,
1996. The shares issued to Mr. Bartling pursuant to this election
qualified as shares purchased for the grant of matching stock and
accordingly the value of these 20,000 shares of matching stock was
determined by multiplying such shares by the closing price of the
Common Stock on December 31, 1996, the date applicable to such
qualified matching purchase, which was $10.312. Mr. Bartling elected to
contribute the shares subject to each of the foregoing grants to the
Cardinal Realty Services, Inc. Executive Deferred Compensation Rabbi
Trust. This amount also includes (a) payments of $12,500 per month from
January 1, 1996 to November 30, 1996 for Mr. Bartling's relocation and
temporary living expenses, as well as a payment of $154,800 to
compensate Mr. Bartling for any taxes relating to such monthly
payments, and (b) a car allowance of $750 per month.
(8) Mr. Bartling received an award of 45,000 shares of restricted Common
Stock on April 5, 1996, one-third of which vest on the third, fourth
and fifth anniversaries of such date. The value of this award was
determined by multiplying the number of shares subject to this grant by
the closing price of the Common Stock on April 5, 1996, $8.937. The
value of this award at the end of the 1997 fiscal year was $776,250
based on the fiscal year-end price of $17.25 per share. Mr. Bartling is
entitled to receive dividends, if paid, on this restricted Common Stock
as and when such stock vests.
(9) Mr. Bartling received an option to purchase 40,000 shares of Common
Stock at $8.937 per share on April 5, 1996, one-fourth of which vest on
the second, third, fourth and fifth anniversaries of the date of grant.
(10) Includes the Company's payment of a premium in the amount of $1,190 for
a term life insurance policy with a death benefit of $2,000,000 and the
Company's portion of the cost of group term life insurance, health
insurance and disability insurance paid on behalf of Mr. Bartling in
the aggregate amount of $6,181.
(11) Salary for the period from December 1, 1995, when Mr. Bartling
commenced his employment with the Company, to December 31, 1995.
(12) Includes a payment of $12,500, which sum was required to be paid
monthly from December 1, 1995 to November 30, 1996 for Mr. Bartling's
relocation and temporary living expenses, and (b) a car allowance of
$750 for the month of December, 1995.
(13) This amount includes a cash payment of $200,000 and $30,000 Mr.
Thompson elected to receive in the form of 2,912 shares of Common Stock
in lieu of cash. The shares of Common Stock were issued based on a
valuation of $10.312 per share, being the closing price of the Common
Stock on December 31, 1996. Mr. Thompson elected to contribute the
shares to the Cardinal Realty Services, Inc. Executive Deferred
Compensation Rabbi Trust.
36
<PAGE> 39
(14) Cash bonus of $138,000 for 1997 paid in 1998. This amount also includes
an award of 4,000 shares of Common Stock as a stock bonus for 1997
granted in 1998. The value of the stock bonus was determined by
multiplying the number of shares subject to this grant by the closing
price of Common Stock at fiscal year end, which was $17.25.
(15) Mr. Thompson received an award of the 18,000 restricted shares of
Common Stock April 15, 1996, providing that so long as Mr. Thompson
remains in the employ of the Company, one-third of such shares will be
earned and will be issued when the average number of issued and
outstanding shares of Common Stock over ten consecutive trading days
multiplied by the average closing price of the Common Stock on the
Nasdaq National Market tier of the Nasdaq Stock Market sm over such
period (or if the Common Stock is not listed or admitted to trading on
such exchange, the principal securities exchange on which the Common
Stock is listed or admitted to trading) plus the liquidation value of
all issued and outstanding preferred stock of the Company ("Market
Capitalization"), exceeds $90 million, one-third of which shall vest
when the Market Capitalization exceeds $120 million, and the final
one-third of which shall vest when the Market Capitalization exceeds
$120 million, and the final one-third of which shall vest when the
Market Capitalization exceeds $150 million. The terms of the restricted
share grant provides for acceleration upon a change of control of the
Company or the termination of Mr. Thompson's employment other than for
cause. Mr. Thompson earned two thirds, 12,000 of the 18,000 shares, in
1997. The value of the stock was determined by multiplying the number
of shares subject to this grant by the closing price of the Common
Stock on April 15, 1996, which was $9.25. In addition, Mr. Thompson
earned 64,000 shares of restricted stock pursuant to the terms of the
Performance Equity Plan. The value of this stock was determined by
multiplying the number of shares subject to this grant by the closing
price of the Common Stock on October 7, 1997, $14.812, the closing
price of the Common Stock at the date of the grant. The value of these
vested awards at the end of 1997 fiscal year was $1,311,000 based upon
the fiscal year-end price of $17.25 per share.
(16) Includes the Company's portion of the cost of group term life
insurance, disability and health insurance paid on behalf of Mr.
Thompson in the aggregate amount of $2,400.
(17) Salary for the period from April 1, 1996, when Mr. Thompson commenced
his employment with the Company, to December 31, 1996.
(18) This amount includes a cash bonus for 1996 paid in 1997 in the amount
of $27,203. This amount also includes an award of 12,634 shares of
Common Stock as a stock bonus for 1996 granted in 1997. The value of
the stock bonus was determined by multiplying the number of shares
subject to this grant by the closing price of the Common Stock at
fiscal year-end, which was $10.312.
(19) Includes an award of 10,000 shares of Common Stock in 1997 pursuant to
the terms of Mr. Thompson's Employment Agreement with the Company,
which states that Mr. Thompson will receive one share of Common Stock
for each share of Common Stock purchased by him, up to a maximum of
10,000 shares. The value of 10,000 shares subject to this award was
determined by multiplying such shares by the closing price of the
Common Stock on June 10, 1996, the date of his matching purchase, which
was $9.968. In addition, pursuant to an amendment to Mr. Thompson's
Employment Agreement, Mr. Thompson elected to receive shares of Common
Stock in lieu of cash bonus compensation otherwise payable to him on
account of the Company's 1996 fiscal year. The shares of Common Stock
were issued based on a valuation of $10.312 per share, being the
closing price of the Common Stock on December 31, 1996. The shares
issued to Mr. Thompson pursuant to this election qualified as shares
purchased for the grant of matching stock and accordingly the value of
these 10,000 shares of matching stock was determined by multiplying
such shares by the closing price of the Common Stock on December 31,
1996, the date applicable to such qualified matching purchase, which
was $10.312. Mr. Thompson elected to contribute the shares subject to
each of the foregoing grants to the Cardinal Realty Services, Inc.
Executive Deferred Compensation Rabbi Trust. This amount also includes
a relocation bonus of $60,000 paid in 1997 for moving his principal
residence to Columbus, Ohio, as well as payment of $55,385 to
compensate Mr. Thompson for any taxes relating to such relocation
bonus.
37
<PAGE> 40
(20) Mr. Thompson received an award of 15,000 shares of restricted Common
Stock on April 15, 1996, one-third of which vests on the third, fourth
and fifth anniversaries of such date. The value of this award was
determined by multiplying the number of shares subject to this grant by
the closing price of the Common Stock on April 15, 1996, $9.125. The
value of this award at the end of the 1997 fiscal year was $258,750
based on the fiscal year-end price of $17.25 per share. Mr. Thompson is
entitled to receive dividends, if paid, on the Common Stock as and when
such stock vests.
(21) Mr. Thompson received an option to purchase 25,000 shares of Common
Stock at $8.812 per share on April 1, 1996, one-fifth of which vest on
the first, second, third, fourth and fifth anniversaries of the date of
grant.
(22) Includes the Company's portion of the cost of group term life insurance
and disability insurance paid on behalf of Mr. Thompson in the
aggregate amount of $934.
(23) Salary for the period from June 1, 1997, when Ms. Fox commenced
employment with the Company, to December 31, 1997.
(24) This amount includes a cash bonus for 1997 paid in 1998 in the amount
of $78,750 and a $60,000 payment made upon the execution of her
employment contract. This amount also includes an award of 2,282 shares
of Common Stock as a stock bonus for 1997 granted in 1998. The value of
the stock bonus was determined by multiplying the number of shares
subject to this grant by the closing price of the Common Stock at
fiscal year end, which was $17.25.
(25) Ms. Fox received an award of 15,000 shares of Restricted Common Stock
on June 1, 1997, one-third of which vest on the third, fourth and fifth
anniversaries of such date. The value of this award was determined by
multiplying the number of shares subject to this grant by the closing
price of the Common Stock on June 1, 1997, $12.00. The value of this
award at the end of the 1997 fiscal year was $258,750 based upon the
fiscal year-end price of $17.25 per share. Ms. Fox elected to
contribute the shares subject to the foregoing grant to the Cardinal
Realty Services, Inc. Executive Deferred Compensation Rabbi Trust.
(26) Ms. Fox received an option to purchase 25,000 shares of Common Stock at
$11.875 per share on June 1, 1997, one-fifth of which vest on the
first, second, third, fourth and fifth anniversaries of the date of the
grant.
(27) Includes the Company's portion of the cost of group term life insurance
and disability insurance paid on behalf of Ms. Fox in the aggregate
amount of $1,236.
(28) Cash bonus for 1997 paid in 1998.
(29) Mr. Sosh received an option to purchase 5,000 shares of Common Stock at
$9.625 per share on January 1, 1997, one-third of which options vest on
the first, second and third anniversaries of the date of grant.
(30) Mr. Sosh vested in 22,000 shares of restricted stock pursuant to the
terms of the Performance Equity Plan. The value of this stock was
determined by multiplying the number of shares subject to this grant by
the closing price of the Common Stock on October 7, 1997, which was
$14.812. The value of these vested awards at the end of 1997 fiscal
year was $379,500 based upon the fiscal year-end price of $17.25 per
share.
(31) Includes the Company's portion of the cost of group term life
insurance, health insurance and disability insurance paid on the behalf
of Mr. Sosh in the aggregate amount of $2,400.
38
<PAGE> 41
(32) Cash bonus for 1997 paid in 1998.
(33) Mr. Koegler received an option to purchase 2,500 shares of Common Stock
at $10.312 per share on January 1, 1997, one-third of which options
vest on the first, second and third anniversaries of the date of grant.
(34) Mr. Koegler vested in 22,000 shares of restricted stock pursuant to the
terms of the Performance Equity Plan. The value of this stock was
determined by multiplying the number of shares subject to this grant by
the closing price of the Common Stock on October 7, 1997, which was
$14.812. The value of these vested awards at the end of 1997 fiscal
year was $379,500 based upon the fiscal year-end price of $17.25 per
share.
(35) Includes the Company's portion of the cost of group term life
insurance, health insurance and disability insurance paid on the behalf
of Mr. Koegler in the aggregate amount of $2,400.
(36) Cash bonus for 1996 paid in 1997.
(37) Mr. Koegler received an option to purchase 5,000 shares of Common Stock
at $9.625 per share on June 27, 1996, one-third of which options vest
on the first, second and third anniversaries of the date of the grant.
(38) Includes the Company's portion of the cost of group term life
insurance, health insurance and disability insurance paid on behalf of
Mr. Koegler.
(39) Cash bonus for 1995 paid in 1996.
39
<PAGE> 42
(b) STOCK OPTIONS GRANTS TABLE
The following table sets forth the information noted for all grants of
stock options to each of the executive officers named in the Summary
Compensation Table during 1997:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
APPRECIATION FOR OPTION TERM
- --------------------------------------------------------------------------------------------------------------------------------
NAME NUMBER OF PERCENT OF TOTAL EXERCISE OF EXPIRATION DATE 5% ($) 10% ($)
SECURITIES OPTIONS GRANTED BASE PRICE
UNDERLYING TO EMPLOYEES IN ($/SH)
OPTIONS FISCAL YEAR
GRANTED (#)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Leslie B. Fox 25,000(1) 32.4% $11.875 6/01/2007 $186,703 $473,142
Chief Operating Officer
and Executive Vice
President
Michael F. Sosh 5,000(2) 13% $10.312 1/01/2007 32,426 82,173
Vice President
and Treasurer
Ronald P. Koegler 2,500(3) 6.5% $10.312 1/01/2007 16,213 41,087
Vice President
and Controller
<FN>
(1) Ms. Fox received an option to purchase 25,000 shares of Common Stock with an exercise price of $11.875 per share on June
1, 1997, one-fifth of which vest on the first, second, third, fourth and fifth anniversaries of the date of the grant.
(2) Mr. Sosh received an option to purchase 5,000 shares of Common Stock with an exercise price of $10.312 per share on
January 1, 1997, one-third of which vest on the first, second and third anniversaries of the date of the grant.
(3) Mr. Koegler received an option to purchase 2,500 shares of Common Stock with an exercise price of $10.312 per share on
January 1, 1997, one-third of which vest on the first, second and third anniversaries of the date of the grant.
</FN>
</TABLE>
(c) STOCK OPTIONS VALUE TABLE
The following table sets forth the fiscal year-end value of unexercised
stock options for each of the executive officers named in the Summary
Compensation Table for the 1997 fiscal year.
40
<PAGE> 43
'
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END AT FISCAL YEAR-END
SHARES VALUE (#) ($)
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE (1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John B. Bartling, Jr., Chief 0 Exercisable/ N/A Exercisable/
Executive Officer and President........ 0 0 40,000 Unexercisable(1) $332,500
Unexercisable(2)
Mark D. Thompson, Chief Financial 5,000 Exercisable(3)/ $42,188 Exercisable(4)/
Officer and Executive Vice President.... 0 0 20,000 Unexercisable(3) $168,750
Unexercisable(4)
Leslie B. Fox 0 Exercisable/ N/A Exercisable/
Executive Vice President 25,000 Unexercisable(5) $134,375
Chief Operating Officer................. 0 0 Unexercisable(6)
Michael F. Sosh 1,666 Exercisable/ $11,559 Exercisable/
Vice President 3,334 Unexercisable(7) $23,131
and Treasurer........................... 0 0 Unexercisable(8)
Ronald P. Koegler 5,210 Exercisable/ $63,306 Exercisable/
Vice President and 5,000 $36,987
Controller.............................. 0 0 Unexercisable(9) Unexercisable(10)
- --------------
<FN>
(1) Mr. Bartling received an option to purchase 40,000 shares of Common Stock with an exercise price of
$8.937 per share on April 5, 1996, one-fourth of which vest on the second, third, fourth and fifth
anniversaries of the date of grant, subject to accelerated vesting upon attainment of certain market
capitalization targets.
(2) The value of the stock option was calculated by multiplying the number of underlying securities by the
difference between (a) $17.25 per share being the closing price of the Common Stock at fiscal year-end
on the Nasdaq National Market tier of the Nasdaq Stock Market sm, and (b) the exercise price of the
option, $8.937 per share.
(3) Mr. Thompson received an option to purchase 25,000 shares of Common Stock with an exercise price of
$8.8125 per share on April 1, 1996, one-fifth of which vest on the first, second, third, fourth and
fifth anniversaries of the date of grant.
(4) The value of the stock option was calculated by multiplying the number of underlying securities by the
difference between (a) $10.312 per share being the closing price of the Common Stock at fiscal year-end
on the Nasdaq National Market tier of the Nasdaq Stock Market sm, and (b) the exercise price of the
options, $8.812 per share.
(5) Ms. Fox received an option to purchase 25,000 shares of Common Stock with an exercise price of $11.875
per share on June 1, 1997, one-fifth of which vest on the first, second, third, fourth and fifth
anniversaries of the date of the grant.
(6) The value of the stock option was calculated by multiplying the number of underlying securities by the
difference between (a) $17.25 per share being the closing price of the Common Stock at fiscal year-end on the
Nasdaq National Market tier of the Nasdaq Stock Market sm, and (b) the exercise price
</FN>
</TABLE>
41
<PAGE> 44
of the options, $11.875 per share.
(7) Mr. Sosh received an option to purchase 5,000 shares of Common
Stock with an exercise price of $10.312 per share on January
1, 1997 one-third of which vest on the first, second and third
anniversaries of the date of grant.
(8) The value of the stock option was calculated by multiplying
the number of underlying securities by the difference between
(a) $17.25 per share being the closing price of the Common
Stock at fiscal year-end on the Nasdaq National Market tier of
the Nasdaq Stock Marketsm, and (b) the exercise price of the
options, $10.312 per share.
(9) Mr. Koegler received an option to purchase 2,500 shares of
Common Stock with an exercise price of $10.312 per share on
January 1, 1997 one-third of which vest on the first, second
and third anniversaries of the date of grant. Mr. Koegler
received an option to purchase 5,000 shares of Common Stock
with an exercise price of $9.625 per share on June 27, 1996,
one-third of which vest on the first, second and third
anniversaries of the date of grant. In addition, Mr. Koegler
received an option to purchase 2,710 shares of Common Stock
with an exercise price of $0.71 per share on September 11,
1992, all which have been vested.
(10) The value of the stock option was calculated by multiplying
the number of underlying securities by the difference between
(a) $17.25 per share being the closing price of the Common
Stock at fiscal year-end on the Nasdaq National Market tier of
the Nasdaq Stock Market sm, and (b) the exercise price of the
options.
(d) LONG-TERM INCENTIVE PLANS TABLE
The following table sets forth the information noted for all long-term
incentive plans awards granted to each of the executive officers named in the
Summary Compensation Table during 1997:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Performance Estimated Future Payouts Under Non-Stock Price-Based Plans
Number of or Other Period ---------------------------------------------------------
Shares Until Maturation Threshold Target Maximum
Name (#) or Payout ($ or #) ($ or #) ($ or #)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John B. Bartling, Jr., Chief 144,000(1) (1) 96,000 shares (1) 20,000 or 28,000 48,000 shares (1)
Executive Officer and President shares (1)
Mark D. Thompson, Chief 96,000(2) (2) 64,000 shares (2) 14,000 or 18,000 32,000 shares (2)
Financial Officer and Executive shares (2)
Vice President ...............
Michael F. Sosh 33,000(3) (3) 22,000 shares (3) 4,000 or 11,000 shares (3)
Vice President 7,000 shares(3)
and Treasurer ................
Ronald P. Koegler 33,000(4) (4) 22,000 shares (4) 4,000 or 11,000 shares (4)
Vice President 7,000 shares(4)
and Controller
- ---------------------
<FN>
(1) Mr. Bartling received an award of the right to receive 144,000 deferred shares of Common Stock pursuant to the
Performance Equity Plan approved by the shareholders on October 7, 1997. The Performance Plan has a three year
term with increasing performance goals associated with each year. Vesting under the Performance Plan occurs
only upon attainment of specified performance goals. Based upon the performance of the Company in 1997, 96,000
of the deferred shares were earned. The terms of the deferred shares provide for acceleration upon change of
control of the Company or the termination of Mr. Bartling's employment other than for cause. The earned shares
were contributed to the Cardinal Realty Services, Inc. Executive Deferred Compensation Rabbi Trust.
(2) Mr. Thompson received an award of the right to receive 96,000 deferred shares of Common Stock pursuant to the
Performance Equity Plan approved by the shareholders on October 7, 1997. The Performance Plan has a
</FN>
</TABLE>
42
<PAGE> 45
three year term with increasing performance goals associated with each
year. Vesting under the Performance Plan occurs only upon attainment of
specified performance goals. Based upon the performance of the Company
in 1997, 64,000 of the deferred shares were earned. The terms of the
deferred shares provide for acceleration upon change of control of the
Company or the termination of Mr. Thompson's employment other than for
cause. The earned shares were contributed to the Cardinal Realty
Services, Inc. Executive Deferred Compensation Rabbi Trust.
(1) Mr. Sosh received an award of the right to receive 33,000 deferred
shares of Common Stock pursuant to the Performance Equity Plan approved
by the shareholders on October 7, 1997. The Performance Plan has a
three year term with increasing performance goals associated with each
year. Vesting under the Performance Plan occurs only upon attainment of
specified performance goals. Based upon the performance of the Company
in 1997, 22,000 of the deferred shares were earned. The terms of the
deferred shares provide for acceleration upon change of control of the
Company or the termination of Mr. Sosh's employment other than for
cause. The earned shares were contributed to the Cardinal Realty
Services, Inc. Executive Deferred Compensation Rabbi Trust.
(2) Mr. Koegler received an award of the right to receive 33,000 deferred
shares of Common Stock pursuant to the Performance Equity Plan approved
by the shareholders on October 7, 1997. The Performance Plan has a
three year term with increasing performance goals associated with each
year. Vesting under the Performance Plan occurs only upon attainment of
specified performance goals. Based upon the performance of the Company
in 1997, 22,000 of the deferred shares were earned. The terms of the
deferred shares provide for acceleration upon change of control of the
Company or the termination of Mr. Koegler's employment other than for
cause. The earned shares were contributed to the Cardinal Realty
Services, Inc. Executive Deferred Compensation Rabbi Trust.
(e) TRUSTEE COMPENSATION
Each trustee of the Company who is not an employee of the Company is
paid an annual retainer fee of $15,000, plus (a) meeting fees of $1,000 for
attendance at each meeting of the Board and (b) $750 for each committee meeting
that occurs on a date when the full Board does not meet. Pursuant to the
Company's 1992 Incentive Equity Plan, as amended (the "Incentive Equity Plan"),
each member of the Board who was not employed by the Company was granted, at the
commencement of the trustee's term, a stock option to purchase shares of the
Company's Common Stock representing 0.1875% of the Company's "Total Committed
Equity", subject to certain vesting requirements (all of which have been
satisfied), which was subsequently calculated to be an option to purchase 15,000
shares of the Company's Common Stock for each trustee. The foregoing stock
options expire on September 19, 2002. "Total Committed Equity" is defined in the
Incentive Equity Plan as the total number of shares of the Company's Common
Stock (a) issued upon the allowance of claims (as defined in Section 101(5) of
the Bankruptcy Code) pursuant to the Third Amended Plan of Reorganization of the
Company and its substantively consolidated subsidiaries (the "Plan of
Reorganization") that was confirmed by the United States Bankruptcy Court for
the Southern District of Ohio, Eastern Division (the "Bankruptcy Court") on
August 26, 1992 and became effective on September 11, 1992 (the "Effective
Date") and (b) issued or reserved for issuance under the Incentive Equity Plan
as of September 11, 1992. In addition, each trustee was granted on November 30,
1995, May 23, 1996 and October 7, 1997 and will be granted annually on the day
after the Company's Annual Meeting of Shareholders, so long as each trustee
remains a trustee of the Company, an option to purchase 4,000 shares of the
Company's Common Stock with an exercise price equal to the fair market value on
the date of the grant a ten year term from date of grant and a vesting period of
the lesser of one year or the period from the date of the grant to the next
annual meeting of shareholders.
In October 1997, the shareholders of the Company approved the Company's
1997 Performance Equity Plan (the "Performance Plan"). The Performance Plan
authorizes the grant of restricted stock awards to certain officers and
non-employee trustees. The Performance Plan has a three year term (1997 through
1999), with increasing performance goals associated with each year of the term.
A total of 636,000 shares of restricted Common Stock are available for grants.
On October 7, 1997 the Compensation Committee of the Company's Board of Trustees
authorized restricted stock grants for the full 636,000 shares of which 297,000
shares were awarded to the non-employee trustees. The trustees vested in 198,000
shares based upon the achievement of
43
<PAGE> 46
certain performance goals in 1997. Vesting under the Performance Plan occurs
only upon attainment of specified performance goals. The performance goals are
stated as percentage increases over base line amounts established, and as
defined, in the Performance Plan approved by shareholders. Any awards that
remain non-vested after the third year will be forfeited.
At the Company's annual shareholders meeting held on May 22, 1996, the
shareholders approved the Company's Non-Employee Trustee Restricted Stock Plan
(the "Trustees Restricted Stock Plan"). Under the terms of the Trustees
Restricted Stock Plan, each non-employee trustee of the Company may elect to
receive shares of the Company's Common Stock in lieu of cash trustees fees
otherwise payable to him. The Company has reserved 50,000 shares for issuance
under the Trustees Restricted Stock Plan and is also authorized to purchase
shares of the Company's Common Stock on the open market or in private
transactions in order to provide for the payment of shares of Common Stock to
non-employee trustees under the Trustees Restricted Stock Plan. Each
non-employee trustee who participates in the Trustees Restricted Stock Plan
receives shares of restricted Common Stock in lieu of cash compensation with the
shares paid to such trustee being valued at a 20% discount from their fair
market value on the date of payment. Shares of restricted Common Stock issued or
paid to trustees under the Trustees Restricted Stock Plan have a restriction
period of 3 years. The trustee may not sell, exchange, transfer, pledge,
hypothecate, assign or otherwise dispose of the shares during the restriction
period, except by bequest pursuant to a will or by intestacy. All restrictions
will lapse and the holder of the restricted Common Stock will be entitled to
receipt of the shares following the earliest of (a) 3 years from the date of the
issuance or payment of the restricted Common Stock to the holder; (b) the date
of the holder's death or disability; (c) the date the holder, after being
nominated by the Board, is not elected by the shareholders in an election for
the Board; or (d) the date on which the Board determines that the holder will
not be nominated for election to the Board. Shares of the restricted Common
Stock will be forfeited to the Company in the event that, during the restriction
period, the holder (a) resigns (other than by reason of disability) or is
dismissed for cause from the Board during his elected term as a trustee; (b)
declines to stand for an election to the Board after having been nominated by
the Board; or (c) sells, exchanges, transfers, pledges, hypothecates, assigns or
otherwise attempts to dispose of shares of restricted Common Stock except by
bequest pursuant to a will or intestacy. As of the end of the Company's 1997
fiscal year, each non-employee trustee had elected to participate in the
Trustees Restricted Stock Plan by electing to receive shares of restricted
Common Stock in lieu of a percentage of trustees fees otherwise payable in cash,
such elective percentages ranging from 25% to 100% of trustees fees.
(g) COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following Report of the Compensation Committee and the Performance
Graph included in this Form 10-K shall not be deemed to be incorporated by
reference by any general statement incorporating by reference this Form 10-K
into any filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent the Company specifically
incorporates this Report or the Performance Graph by reference therein, and
shall not be deemed soliciting material or otherwise deemed filed under either
of such Acts.
The Compensation Committee administers the Company's various
compensation plans and reviews and recommends to the Board of Trustees
compensation levels for executive officers, evaluates executive management's
performance and considers executive management succession and related matters.
The Compensation Committee is composed exclusively of independent, non-employee
trustees.
Philosophy of Compensation Committee
The Compensation Committee believes that executive compensation should
reflect the value created for the Company's shareholders while supporting the
Company's long-term strategic goals. It is the belief of the Compensation
Committee that executive compensation should serve to:
44
<PAGE> 47
* reward individuals for significant contribution to the
Company's success;
* align the interests of executives with those of the Company's
long-term investors;
* retain, motivate and attract qualified executives; and
* provide incentives to executives to achieve strategic
objectives in a manner consistent with the Company's values.
Executive Officer Compensation
Individual executive officer compensation consists of three components:
base salary, annual cash and stock incentive bonuses and long-term equity
incentives. Each component will be discussed below.
Salaries for executive officers are reviewed by the Compensation
Committee on an annual basis and may be increased based on (a) individual
performance and contribution and (b) increases in competitive pay levels.
The Compensation Committee believes that the compensation packages
agreed to with its executive officers and other significant employees genuinely
preserves its philosophical objectives by placing significant emphasis on the
latter two components of the Compensation Committee's stated compensation
components, namely, annual cash and stock incentive bonus and long term equity
incentives. In this regard, the Company's compensation arrangements are weighted
heavily towards incentive bonuses based upon the Company's financial performance
measured in terms of its earnings before interest, taxes, depreciation, and
amortization without regard to extraordinary gains or losses ("Adjusted EBITDA")
and awards of restricted stock which will vest on the basis of growth in the
Company's market capitalization. A significant portion of management's
compensation takes the form of equity ownership in the Company. In this way, the
Compensation Committee believes that Mr. Bartling's Chief Executive Officer
compensation package and the compensation packages of the Company's other
executive officers implements its goal of aligning his interests with those of
the Company's long-term investors.
The Compensation Committee has confirmed that all base salaries for the
Company's executive officers, including Mr. Bartling's base compensation, are
reasonable and competitive, based upon the surveys compiled by management, as
well as the advice and consultation of the representatives of the consulting
firm.
Management Incentive Plan
Annual bonuses for the executive officers on account of the Company's
1997 fiscal year were governed by the Company's 1996 Incentive Compensation Plan
(the "Incentive Compensation Plan"), which was specifically designed to link
executive compensation to the Company's achieving certain operating goals and
exceeding certain projected increases in specific financial measures applicable
to the specific role in which each executive officer (and each other employee of
the Company participating in the Incentive Compensation Plan) is engaged. The
financial measures include Adjusted EBIDTA for the Company's Chief Executive
Officer and senior financial and legal officers, net income from property
management for the Company's property management employees, and return on equity
for the Company's Investment Management division employees (i.e., those
employees committed to maximizing the Company's return on its investments in
real property assets). Under the terms of the Incentive Compensation Plan, upon
achieving increases in the designated financial performance measure when
compared to the Company's 1996 results, the executive officers and other
participating employees are entitled to certain cash and stock awards.
As discussed above and disclosed elsewhere in this Form 10-K, a
significant part of Mr. Bartling's compensation package includes the award of
the aggregate of 85,000 shares of restricted stock which will vest in part based
upon Mr. Bartling's continued employment and in part upon increases in the
Company's market capitalization as well as the award of stock options and
matching stock. These awards were provided for in Mr. Bartling's Employment
Agreement, which became effective on December 1, 1995, while the shares of
45
<PAGE> 48
restricted stock as well as the stock option award were issued on April 5, 1996.
Similar awards, albeit in lesser amounts, were granted to the Company's new
Executive Vice President and Chief Operating Officer and its incumbent Executive
Vice President and Chief Financial Officer and Senior Vice President --
Acquisitions when such executive officers were retained in April 1996.
Deductibility
The Company intends, to the extent practicable, to preserve the
deductibility under the Internal Revenue Code of compensation paid to its
executive officers, while maintaining compensation programs that will attract
and retain its executives in a competitive environment; provided that, in light
of the Company's ability to offset current income taxes through the utilization
of net operating loss carry forwards and passive activity loss carry forwards,
the Compensation Committee will consider facilitating executives' ability to
defer taxable incentive compensation (thereby also deferring, but not reducing,
the Company's deductibility of such items). In keeping with this philosophy to
provide for maximizing compensation payable in the form of the Company's Common
Shares, as well as to provide its executives with the ability to defer taxable
incentive compensation, the Company adopted its Executive Deferred Compensation
Plan and Executive Deferred Compensation Rabbi Trust in 1996. Pursuant to the
Executive Deferred Compensation Plan, the Company's highly compensated executive
officers can elect to direct the Company to issue any shares of the Company's
Common Stock to The Provident Bank, as Trustee under the Executive Deferred
Compensation Rabbi Trust, rather than directly to the employee otherwise
entitled to receive the shares of Common Stock, thereby deferring the
recognition of taxable income for federal income tax purposes. The Company
believes that, for the foreseeable future, this practice will not otherwise
result in increased income tax liability to the Company due to the availability
of net operating and passive activity loss carry forwards for federal income tax
purposes.
Conclusion
In conclusion, the Compensation Committee will enable the Company to
retain highly qualified executive management and motivate its officers with
respect to the attainment of important goals and objectives. The Compensation
Committee believes the focus on Common Stock ownership by the executive officers
and other long-term stock programs has aligned and will continue to align the
interests of management with the interests of shareholders of the Company. The
Compensation Committee further believes that its continuing efforts to refine
the best measures of the Company's long-term growth and improving financial
results are reflected in the terms of the 1996 Incentive Compensation Plan and
will continue to be reflected in future management incentive programs.
The Compensation Committee of the Board of Trustees
Glenn C. Pollack, Chairman
George J. Neilan
Stanley R. Fimberg
46
<PAGE> 49
(h) PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Company's Common Shares, to that of the Dow Jones Real Estate Investment Index
and the Dow Jones Market Index. In calculating cumulative total shareholder
return, reinvestment of dividends is assumed. This graph is shown for the five
full fiscal years in which the Company's Common Shares (NYSE: LFT, formerly
Nasdaq: CRSI) have been registered under the Securities Exchange Act of 1934, as
amended.
[GRAPH]
VALUE OF $100 INVESTED AT 12/31/92
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
LFT Market Value 100 250 350 583 687 1,149
-----------------------------------------------------------------------------------------------------------------------
Dow Jones Real Estate 100 112 103 121 150 170
-----------------------------------------------------------------------------------------------------------------------
Dow Jones Equity Mkt 100 107 104 139 167 220
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE> 50
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
SECURITY OWNERSHIP OF CERTAIN PERSONS
On March 27, 1998, the Company had outstanding 9,203,916 shares of
Common Stock. The following table sets forth the information as of March 27,
1998 regarding Common Stock owned beneficially by (a) each person known by the
Company to own beneficially more than 5% of the Company's outstanding Common
Stock, (b) each trustee of the Company and executive officer named in the
Summary Compensation table above and (c) all present executive officers and
trustees of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF UNVESTED
NAME AND ADDRESS OF BENEFICIAL PERCENTAGE OF COMPENSATORY
BENEFICIAL OWNER OWNERSHIP(a) COMMON STOCK SHARES(b)
- ------------------------------------------------------------- ------------------------- ---------------------------------------
<S> <C> <C> <C>
Bank of America National 1,027,858 11.2% --
Trust & Savings Association
333 South Hope Street
Los Angeles, CA 90071
Trustees and Executive Officers Named in "Summary Compensation Table"
John B. Bartling, Jr. 268,880 (c) 2.9% 48,000
Mark D. Thompson 156,546 (d) 1.7% 32,000
Leslie B. Fox 43,282 (e) * 113,000
Michael F. Sosh 23,666 (f) * 14,334
Stanley R. Fimberg 210,000 (g) 2.3% 11,000
Robert V. Gothier, Sr. 54,732 (h) * 15,000
Ronald P. Koegler 39,194 (i) * 16,000
Joseph E. Madigan 51,522 (j) * 21,668
George J. Neilan 48,308 (k) * 15,000
George R. Oberer, Sr. 89,878 (l) 1.0% 15,000
Glenn C. Pollack 55,614 (m) * 15,000
H. Jeffrey Schwartz 70,938 (n) * 15,000
Gerald E. Wedren 47,788 (o) * 15,000
Robert J. Weiler 121,586 (p) 1.3% 15,000
All present executive officers and trustees 1,695,832 (q) 17.9% 409,002
of the Company as a group (20 persons)
- --------------------
<FN>
* Less than one percent (1%)
</FN>
</TABLE>
48
<PAGE> 51
(a) Unless otherwise indicated, the beneficial owner has sole voting and
investment power over these shares subject to the spousal rights, if
any, of the spouses of those beneficial owners who have spouses.
(b) The amounts reported in this column consist of restricted shares and
Deferred Shares, which will not vest within 60 days, held on behalf of
the specified individual by the Cardinal Realty Services, Inc.
Executive Deferred Compensation Rabbi Trust ("Rabbi Trust") and as to
which the specified individual has neither investment nor voting power,
and Common shares subject to options which are not exercisable within
60 days. These amounts are not deemed to be beneficially owned and are
not included in the column "Amount and Nature of Beneficial Ownership."
(c) This amount includes 40,000 Common Shares subject to options which are
exercisable within 60 days. This amount also includes 218,880 Common
Shares held on behalf of Mr. Bartling by the Rabbi Trust which shares
Mr. Bartling has the right to receive under certain circumstances
within 60 days. This amount does not include 48,000 restricted shares
held on behalf of Mr. Bartling by the Rabbi Trust as to which shares
Mr. Bartling has neither investment nor voting power.
(d) This amount includes 25,000 Common Shares subject to options which are
exercisable within 60 days. This amount also includes 126,546 Common
Shares held on behalf of Mr. Thompson by the Rabbi Trust which shares
Mr. Thompson has the right to receive under certain circumstances
within 60 days. This amount does not include 32,000 restricted shares
held on behalf of Mr. Thompson by the Rabbi Trust as to which shares
Mr. Thompson has neither investment nor voting power.
(e) This amount does not include 25,000 Common Shares subject to options
which are not exercisable within 60 days. This amount also includes
43,282 Common Shares held on behalf of Ms. Fox by the Rabbi Trust which
shares Ms. Fox has the right to receive under certain circumstances
within 60 days. This amount does not include 88,000 restricted shares
held on behalf of Ms. Fox by the Rabbi Trust as to which shares Ms. Fox
has neither investment nor voting power.
(f) This amount includes 1,666 Common Shares subject to options which are
exercisable within 60 days but does not include 3,334 Common Shares
subject to options which are not exercisable within 60 days. This
amount also includes 22,000 Common Shares held on behalf of Mr. Sosh
by the Rabbi Trust which shares Mr. Sosh has the right to receive
under certain circumstances within 60 days. This amount does not
include 11,000 restricted shares held on behalf of Mr. Sosh by the
Rabbi Trust as to which shares Mr. Sosh has neither investment nor
voting power.
(g) This amount includes 22,000 Common Shares held on behalf of Mr. Fimberg
by the Rabbi Trust which shares Mr. Fimberg has the right to receive
under certain circumstances within 60 days. This amount does not
include 11,000 restricted shares held on behalf of Mr. Fimberg by the
Rabbi Trust as to which shares Mr. Fimberg has neither investment nor
voting power.
49
<PAGE> 52
(h) This amount includes 600 Common Shares held in Mr. Gothier's 401(k)
retirement plan account and 15,500 Common Shares subject to options
which are exercisable within 60 days but does not include 4,000 Common
Shares subject to options which are not exercisable within 60 days.
This amount also includes 22,000 Common Shares held on behalf of Mr.
Gothier by the Rabbi Trust which shares Mr. Gothier has the right to
receive under certain circumstances within 60 days and 4,382 restricted
shares as to which Mr. Gothier has voting power but does not have
investment power. This amount does not include 11,000 restricted shares
held on behalf of Mr. Gothier by the Rabbi Trust as to which shares Mr.
Gothier has neither investment nor voting power.
(i) This amount includes 5,210 Common Shares subject to options which are
exercisable within 60 days but does not include 5,000 Common Shares
subject to options which are not exercisable within 60 days. This
amount also includes 22,968 Common Shares held on behalf of Mr.
Koegler by the Rabbi Trust which shares Mr. Koegler has the right to
receive under certain circumstances within 60 days. This amount does
not include 11,000 restricted shares held on behalf of Mr. Koegler by
the Rabbi Trust as to which shares Mr. Koegler has neither investment
nor voting power.
(j) This amount includes 23,000 Common Shares subject to options which are
exercisable within 60 days but does not include 4,000 Common Shares
subject to options which are not exercisable within 60 days. This
amount also includes 23,332 Common Shares held on behalf of Mr. Madigan
by the Rabbi Trust which shares Mr. Madigan has the right to receive
under certain circumstances within 60 days and 2,524 restricted shares
as to which Mr. Madigan has voting power but does not have investment
power. This amount does not include 17,668 restricted shares held on
behalf of Mr. Madigan by the Rabbi Trust as to which shares Mr. Madigan
has neither investment nor voting power.
(k) This amount includes 23,000 Common Shares subject to options which are
exercisable within 60 days but does not include 4,000 Common Shares
subject to options which are not exercisable within 60 days. This
amount also includes 22,000 Common Shares held on behalf of Mr. Neilan
by the Rabbi Trust which shares Mr. Neilan has the right to receive
under certain circumstances within 60 days and 3,308 restricted shares
as to which Mr. Neilan has voting power but does not have investment
power. This amount does not include 11,000 restricted shares held on
behalf of Mr. Neilan by the Rabbi Trust as to which shares Mr. Neilan
has neither investment nor voting power.
(l) This amount includes 23,000 Common Shares subject to options which are
exercisable within 60 days but does not include 4,000 Common Shares
subject to options which are not exercisable within 60 days. This
amount also includes 22,000 Common Shares held on behalf of Mr. Oberer
by the Rabbi Trust which shares Mr. Oberer has the right to receive
under certain circumstances within 60 days and 5,302 restricted shares
as to which Mr. Oberer has voting power but does not have investment
power. This amount does not include 11,000 restricted shares held on
behalf of Mr. Oberer by the Rabbi Trust as to which shares Mr. Oberer
has neither investment nor voting power.
(m) This amount includes 23,000 Common Shares subject to options which are
exercisable within 60 days but does not include 4,000 Common Shares
subject to options which are not exercisable within 60 days. This
amount also includes 22,000 Common Shares held on behalf of Mr. Pollack
by the Rabbi Trust which shares Mr. Pollack has the right to receive
under certain circumstances within 60 days and 5,614 restricted shares
as to which Mr. Pollack has voting power but does not have investment
power. This amount does not include 11,000 restricted shares held on
behalf of Mr. Pollack by the Rabbi Trust as to which shares Mr. Pollack
has neither investment nor voting power.
(n) This amount includes 23,000 Common Shares subject to options which are
exercisable within 60 days but does not include 4,000 Common Shares
subject to options which are not exercisable within 60 days. This
amount also includes 22,000 Common Shares held on behalf of Mr.
Schwartz by the Rabbi Trust which shares Mr. Schwartz has the right to
receive under certain circumstances within 60 days and 5,938 restricted
shares as to which Mr.
50
<PAGE> 53
Schwartz has voting power but does not have investment power. This
amount does not include 11,000 restricted shares held on behalf of Mr.
Schwartz by the Rabbi Trust as to which shares Mr. Schwartz has neither
investment nor voting power.
(o) This amount includes 23,000 Common Shares subject to options which are
exercisable within 60 days but does not include 4,000 Common Shares
subject to options which are not exercisable within 60 days. This
amount also includes 22,000 Common Shares held on behalf of Mr. Wedren
by the Rabbi Trust which shares Mr. Wedren has the right to receive
under certain circumstances within 60 days and 2,788 restricted shares
as to which Mr. Wedren has voting power but does not have investment
power. This amount does not include 11,000 restricted shares held on
behalf of Mr. Wedren by the Rabbi Trust as to which shares Mr. Wedren
has neither investment nor voting power.
(p) This amount includes 23,000 Common Shares subject to options which are
exercisable within 60 days but does not include 4,000 Common Shares
subject to options which are not exercisable within 60 days. This
amount also includes 22,000 Common Shares held on behalf of Mr. Weiler
by the Rabbi Trust which shares Mr. Weiler has the right to receive
under certain circumstances within 60 days and 4,586 restricted shares
as to which Mr. Weiler has voting power but does not have investment
power. This amount does not include 11,000 restricted shares held on
behalf of Mr. Weiler by the Rabbi Trust as to which shares Mr. Weiler
has neither investment nor voting power.
(q) This amount includes 1,456 Common Shares held in individual Trustee and
executive officer 401(k) retirement plan accounts, 34,442 restricted
shares as to which certain trustees have voting power but do not have
investment power, 699,493 Common Shares held on behalf of certain
Trustees and executive officers by the Rabbi Trust which shares such
Trustees and executive officers have the right to receive under certain
circumstances within 60 days, and 262,070 Common Shares subject to
options which are exercisable within 60 days. This amount does not
include 328,667 restricted shares held on behalf of certain Trustees
and executive officers by the Rabbi Trust as to which shares such
Trustees and executive officers have neither investment nor voting
power.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Joseph E. Madigan, Chairman of the Company's Board of Trustees,
received a retainer in 1997 of $5,000 per month. Mr. Madigan also received in
December 1997, and will receive annually during his tenure as chairman, an award
of 4,000 shares of restricted Common Stock, one-third of which shares vest
annually over a three year period.
H. Jeffrey Schwartz, trustee of the Company, is a partner in the law
firm of Benesch, Friedlander, Coplan & Aronoff LLP, which serves as outside
legal counsel to the Company.
Robert J. Weiler, a trustee of the Company, is a principal of Americana
Investment Company, the lessor of the building housing the Company's principal
operating offices. Mr. Weiler did not participate in the Company's decision to
relocate to the headquarters or in negotiations for a renewal term for a lease
(for a smaller amount of space) as its operating officer. Management believes
that the lease terms for the Company's executive offices are competitive with
commercial lease rates in the Columbus, Ohio market. The annual lease payments
are as follows:
<TABLE>
<S> <C> <C> <C>
1997 $282,580 ($6.50/sq. ft.)
</TABLE>
51
<PAGE> 54
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
---------------------------------------------------------------
(a) Documents filed as part of this report:
Consolidated Financial Statement Schedules: (See the financial
statement schedules listed on Index to Consolidated Financial
Statement Schedules on Page F-1 of this report).
(b) Reports on Form 8-K: The Company did not file any reports on Form 8-K
during the fourth quarter of 1997.
52
<PAGE> 55
3. Exhibits:
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE
--- ----------- ----
<S> <C> <C>
2.1 Third Amended Disclosure Statement Pursuant to Incorporated by reference to Exhibit 2.1 to
Section 1125 of Bankruptcy Code to Accompany the the Company's Registration Statement on Form
Plan of Reorganization of Jay Alix, Chapter 11 10 (the "Form 10")
Trustee for Cardinal Industries, Inc. and its
Substantively Consolidated Subsidiaries and Third
Amended Plan of Reorganization of Jay Alix, Chapter
11 Trustee, for Cardinal Industries, Inc. and its
Substantively Consolidated Subsidiaries
2.2 Findings of Fact, Conclusions of Law and Order Incorporated by reference to Exhibit 2.2 to
Confirming Third Amended Plan of Reorganization of the Form 10
Jay Alix, Chapter 11 Trustee, for Cardinal
Industries, Inc. and its Substantively Consolidated
Subsidiaries
3.1 Amended and Restated Articles of Incorporation filed Incorporated by reference to Exhibit 3.1 to
September 11, 1992 with the Ohio Secretary of State the Form 10
3.2 Certificate of Amendment to the Articles of Incorporated by reference to Exhibit 3.2 to
Incorporation of Cardinal Reality Services, Inc. the Form 10
filed October 27, 1992 with the Ohio Secretary of
State
3.3 Certificate of Amendment to the Articles of Incorporated by reference to Exhibit 3.3 to the
Incorporation filed January 9, 1996 of Cardinal Company's Annual Report on Form 10-K for the fiscal
Realty Services, Inc. with the Ohio Secretary year ended December 31, 1996 (the "1995 Form 10-K")
of State
3.4 Certificate of Amendment to the Articles of Filed as an Exhibit to this Form 10-K
Incorporation of Lexford, Inc. filed October
8, 1997 with the Ohio Secretary of State
3.5 Amended Code of Regulations of Lexford, Inc. Incorporated by reference to Exhibit 3.3 to
the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993 (the
"1993 Form 10-K")
3.6 Declaration of Trust of Lexford Residential Incorporated by reference to Annex B to the
Trust, dated January 16, 1998 as amended Prospectus filed pursuant to Rule 424(b) under
(the "Declaration of Trust") the Securities Act as part of the Company's
Registration Statement on Form S-4 initially
filed on January 20, 1998
3.7 Articles of Amendment to Declaration of Trust Filed as an Exhibit to this Form 10-K
dated March 14, 1998
3.8 Bylaws of Lexford Residential Trust Incorporated by reference to Annex C Amendment
Number 1 to the Form S-4 Registration Statement
filed January 30, 1998
4.1 Form of Common Share Certificate Filed as an Exhibit to this Form 10-K
</TABLE>
53
<PAGE> 56
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE
--- ----------- ----
<S> <C> <C>
10.1 Amended and Restated Loan and Security Agreement, Incorporated by reference to Exhibit 10.1 to the
dated September 30, 1997, among The Provident Bank, Company's Quarterly Report on Form 10-Q for the
the Company and certain of the Company's subsidiaries quarterly period ended September 30, 1997 (the
"Third Quarter 1997 Form 10-Q")
10.2 Cognovit Promissory Note (Renewal Consolidating Incorporated by reference to Exhibit 10.2 to
Balance Revolving Line) dated September 30, 1997 the Third Quarter 1997 Form 10-Q
issued by the Company and its material subsidiaries
in favor of The Provident Bank.
10.3 Cognovit Promissory Note dated August 11, 1995 in Incorporated by reference to Exhibit 10.4 to
the amount of $7,000,000 issued by the Company and the 1995 Form 10-K
certain of its subsidiaries in favor of The
Provident Bank.
10.4 Agreement for Modification of Management Agreement Incorporated by reference to Exhibit 10.5 to
dated as of August 11, 1995 among Cardinal Apartment the 1995 Form 10-K
Management Group, Inc., the Company and certain of
its subsidiaries
10.5 Assignment of Management Contracts dated August 11, Incorporated by reference to Exhibit 10.6 to
1995 between Cardinal Apartment Management Group, the 1995 Form 10-K
Inc. and The Provident Bank
10.6 Stock Pledge Agreement dated August 11, 1995 between Incorporated by reference to Exhibit 10.7 to
the Company and The Provident Bank the 1995 Form 10-K
10.7 Stock Pledge Agreement dated August 11, 1995 between Incorporated by reference to Exhibit 10.8 to
Cardinal Industries of Texas, Inc. and The Provident the 1995 Form 10-K
Bank
10.8 Stock Pledge Agreement dated August 11, 1995 between Incorporated by reference to Exhibit 10.9 to
Cardinal Industries Development Corporation and The the 1995 Form 10-K
Provident Bank
10.9 Stock Pledge Agreement dated August 11, 1995 between Incorporated by reference to Exhibit 10.10 to
Cardinal Realty Company and The Provident Bank the 1995 Form 10-K
10.10 Limited Power of Attorney dated August 11, 1995 by Incorporated by reference to Exhibit 10.11 to
certain subsidiaries of the Company to the Company the 1995 Form 10-K
</TABLE>
54
<PAGE> 57
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE
--- ----------- ----
<S> <C> <C>
10.11 Limited Power of Attorney dated August 11, 1995 by Incorporated by reference to Exhibit 10.12 to
the Company and certain of its subsidiaries to The the 1995 Form 10-K
Provident Bank
10.12 Waiver Agreement dated August 11, 1995 among The Incorporated by reference to Exhibit 10.13 to
Provident Bank and the Company and certain of its the 1995 Form 10-K
subsidiaries
10.13 Post Closing Agreement dated as of August 11, 1995 Incorporated by reference to Exhibit 10.14 to
among The Provident Bank and the Company and certain the 1995 Form 10-K
of its subsidiaries
10.14 Assumption of Loan and Security Agreement dated as Filed as an Exhibit to the 1996 Form 10-K
of February 26, 1997 between The Provident Bank and
Lexford Properties, Inc.
10.15 Form of Management Agreement between Lexford, Filed as an Exhibit to this Form 10-K
Properties, Inc. and certain Properties (as revised
August 1, 1996)
10.16 Form of Partnership Asset Management Agreement, Filed as an Exhibit to this Form 10-K
dated January 1, 1995 between Cardinal Apartment
Management Group, Inc. (which was merged with and
into the Company) and certain Properties
10.17 Form of Extended Partnership Administration Filed as an Exhibit to this Form 10-K
Agreement, dated January 1, 1995 between Cardinal
Apartment Management Group, Inc. (which was merged
with and into the Company) and certain Properties
10.18 Form of Agreement for Tax Appeal Services between Filed as an Exhibit to this Form 10-K
the Company and certain Properties (as revised
February 1996)
10.19 Lease, dated February 24, 1998, between the Company Filed as an Exhibit to this Form 10-K
and the Americana Investment Company
10.20 Master Equipment Lease dated September 30, 1996, Filed as an Exhibit to this Form 10-K
between Alliance Leasing and Services Group, Ltd.
and the Company
</TABLE>
55
<PAGE> 58
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE
--- ----------- ----
<S> <C> <C>
10.21 Agreement and Plan of Merger by and among the Incorporated by reference to Exhibit 10.1 to the
Company, Rexflor Acquisition Corporation and Company's Quarterly Report on Form 10-Q for the
Lexford Properties, Inc. ("Lexford") and the quarterly period ended June 30, 1996 (the "Second
Shareholders of Lexford dated as of July 19, 1996 Quarter 1996 Form 10-Q")
10.22 Employment Agreement dated as of August 1, 1996 Incorporated by reference to Exhibit 10.2 to
between Lexford and Patrick M. Holder, President of the Second Quarter 1996 Form 10-Q
Lexford Properties, Inc.
10.23 Employment Agreement dated as of August 1, 1996 Incorporated by reference to Exhibit 10.3 to
between Lexford and Bruce Woodward, Vice President the Second Quarter 1996 Form 10-Q
of Lexford Properties, Inc.
10.24 Employment Agreement dated as of August 1, 1996 Incorporated by reference to Exhibit 10.4 to
between Lexford and Annette Hoover, Senior Vice the Second Quarter 1996 Form 10-Q
President of Lexford -- Property Management of the
Company
10.25 Employment Agreement dated as of August 1, 1996 Incorporated by reference to Exhibit 10.6 to
between Lexford and Peggy Crow Smith, Vice President the Second Quarter 1996 Form 10-Q
of Lexford
10.26 Consulting Agreement dated as of August 1, 1996 Incorporated by reference to Exhibit 10.7 to
between the Company and Stanley R. Fimberg the Second Quarter 1996 Form 10-Q
10.27 Form of Registration Rights Agreement by and between Incorporated by reference to Exhibit 10.10 to
the Company and the former shareholders of Lexford the Second Quarter 1996 Form 10-Q
Properties, Inc.
10.28 1997 Performance Equity Plan of the Company Incorporated by reference to the Company's
Proxy Statement, dated August 28, 1997, for
the Company's Annual Shareholders Meeting
10.29 1992 Incentive Equity Plan of the Company, as Incorporated by reference to Exhibit 10.26 to
amended (effective November 30, 1995) the 1995 Form 10-K
10.30 Form of Deferred Shares Agreement for Employees of Incorporated by reference to Exhibit 10.31 to
the Company the Form 10
10.31 Form of Restricted Shares Agreement for Key Incorporated by reference to Exhibit 10.32 to
Employees of the Company the Form 10
10.32 Form of Restricted Shares Agreement for Executive Incorporated by reference to Exhibit 10.33 to
Officers of the Company the Form 10
</TABLE>
56
<PAGE> 59
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE
--- ----------- ----
<S> <C> <C>
10.33 Form of Non-Qualified Stock Option Agreement for Incorporated by reference to Exhibit 10.33 to
Participants in Trustee's Employee Retention Plan the Form 10
10.34 Form of Non-Qualified Stock Option Agreement for Incorporated by reference to Exhibit 10.36 to
Non-Employee Directors the Form 10
10.35 401(k) Plan of the Company Incorporated by reference to Exhibit 10.41 to
the Form 10
10.36 Employment Agreement dated as of December 1, 1995, Incorporated by reference to Exhibit 10.38 to
as amended, between the Company and John B. the 1995 Form 10-K
Bartling, Jr., President and Chief Executive Officer
of the Company
10.37 Employment Agreement dated as of April 1, 1996, as Incorporated by reference to Exhibit 4.11 to Form
amended, between the Company and Mark D. Thompson, S-8 Registration Statement dated July 8, 1997
Executive Vice President and Chief Financial Officer (the "1997 Form S-8")
of the Company
10.38 Employment Agreement dated as of April 15, 1996, as Incorporated by reference to Exhibit 4.15
amended, between the Company and Paul R. Selid, to 1997 Form S-8
Senior Vice President-Asset Management of the Company
10.39 Employment Agreement dated as of June 1, 1997, Incorporated by reference to Exhibit 4.27 of
between the Company and Leslie B. Fox, Executive 1997 Form S-8
Vice President and Chief Operating Officer of the
Company ("Fox Employment Agreement")
11.1 Statement re: computation of per share earnings See Index to Financial Information - Note 1
in the Notes to Consolidated Financial
Statements
21.1 Subsidiaries of The Company Filed as an Exhibit to this Form 10-K
27.1 Financial Data Schedule Filed as an Exhibit to this Form 10-K
99.1 Individual Property Financial Information Summary Filed as an Exhibit to this Form 10-K
</TABLE>
57
<PAGE> 60
SIGNATURES
Pursuant to requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.
<TABLE>
<S> <C>
LEXFORD RESIDENTIAL TRUST
(Registrant)
Date: March 31, 1998
By: /s/ John B. Bartling, Jr.
------------------------------------------------------------
John B. Bartling, Jr., President and Chief Executive Officer
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Joseph E. Madigan Chairman of the Board March 31, 1998
- --------------------------------
Joseph E. Madigan
/s/ John B. Bartling, Jr. President, Chief Executive Officer and Director March 31, 1998
- --------------------------------
John B. Bartling, Jr.
/s/ Mark D. Thompson Executive Vice President
- -------------------------------- and Chief Financial Officer March 31, 1998
Mark D. Thompson
/s/ Ronald P. Koegler Vice President and Controller March 31, 1998
- --------------------------------
Ronald P. Koegler
/s/ Robert V. Gothier, Sr. Director March 31, 1998
- --------------------------------
Robert V. Gothier, Sr.
/s/ George J. Neilan Director March 31, 1998
- --------------------------------
George J. Neilan
/s/ George R. Oberer, Sr. Director March 31, 1998
- --------------------------------
George R. Oberer, Sr.
/s/ Glenn C. Pollack Director March 31, 1998
- --------------------------------
Glenn C. Pollack
/s/ H. Jeffrey Schwartz Director March 31, 1998
- --------------------------------
H. Jeffrey Schwartz
/s/ Gerald E. Wedren Director March 31, 1998
- --------------------------------
Gerald E. Wedren
/s/ Robert J. Weiler Director March 31, 1998
- --------------------------------
Robert J. Weiler
/s/ Stanley R. Fimberg Director March 31, 1998
- --------------------------------
Stanley R. Fimberg
/s/ Patrick M. Holder Director March 31, 1998
- --------------------------------
Patrick M. Holder
</TABLE>
58
<PAGE> 61
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENTS
Report of Independent Auditors............................................F-2
Consolidated Balance Sheets at December 31, 1997 and 1996.................F-3
Consolidated Statements of Income for the years ended
December 31, 1997, 1996 and 1995 ....................................F-4
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1997, 1996 and 1995 ....................................F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 ..............................F-6 - F-7
Notes to Consolidated Financial Statements.........................F-8 - F-33
Consolidated Financial Statement Schedules:
Schedule II - Valuation and Qualifying Accounts.....................F-34
Schedule III - Real Estate and Accumulated Depreciation......F-35 - F-41
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions, are inapplicable, or the information required is
included in the Consolidated Financial Statements or notes thereto and
therefore have been omitted.
F-1
<PAGE> 62
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Lexford Residential Trust
We have audited the accompanying consolidated balance sheets of Lexford
Residential Trust (formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
and subsidiaries as of December 31, 1997 and 1996 and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the three
years in the period ended December 31, 1997. Our audits also included the
financial statement schedules listed in the accompanying index. These financial
statements and schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Lexford
Residential Trust and subsidiaries at December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
/s/ ERNST & YOUNG LLP
Columbus, Ohio
February 16, 1998, except for Note 14,
as to which the date is March 18, 1998
F-2
<PAGE> 63
<TABLE>
<CAPTION>
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
1997 1996
---------------- -----------------
<S> <C> <C>
ASSETS
Rental Properties (Notes 2 and 5):
Land...........................................................................$ 23,124,313 $ 23,652,841
Buildings, Improvements and Fixtures........................................... 138,244,903 137,917,083
---------------- -----------------
161,369,216 161,569,924
Accumulated Depreciation....................................................... (9,151,786) (4,478,379)
---------------- -----------------
152,217,430 157,091,545
Investments in and Advances to Unconsolidated Partnerships, net of an allowance
of $2.6 and $1.6 million at December 31, 1997 and 1996, Respectively
(Notes 3 and 12)............................................................... 57,111,374 54,610,421
Cash............................................................................. 2,568,890 3,593,121
Accounts Receivable, Affiliates ($1,990,967 and $4,089,328, net
of an allowance of $941,521 and $2,034,290, at December 31,
1997 and 1996, Respectively), Residents and Other (Note 12).................... 4,898,993 5,044,603
Furniture, Fixtures and Other, Net (Note 1)...................................... 1,719,521 1,167,579
Funds Held in Escrow (Note 1).................................................... 11,887,936 14,011,013
Intangible Assets (Note 1)....................................................... 9,200,531 8,694,925
Prepaids and Other .............................................................. 1,992,921 1,154,572
---------------- -----------------
$ 241,597,596 $ 245,367,779
================ =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgages and Corporate Debt
Non Recourse Mortgages (Note 5)................................................$ 142,636,874 $ 148,056,017
Corporate Debt (Note 4)........................................................ 7,361,682 15,263,268
---------------- -----------------
149,998,556 163,319,285
---------------- -----------------
Accounts Payable................................................................. 1,287,753 1,560,749
Accrued Interest, Real Estate and Other Taxes.................................... 3,719,625 4,023,310
Other Accrued Expenses........................................................... 8,241,526 8,531,031
Other Liabilities................................................................ 3,503,640 5,424,226
---------------- -----------------
Total Liabilities.............................................................. 166,751,100 182,858,601
---------------- -----------------
Commitments and Contingencies (Notes 7, 8, 10)
Shareholders' Equity (Notes 1 and 7):
Preferred Stock, 5,000,000 Shares Authorized, Unissued......................... -- --
Common Stock, .01 par value; 50,000,000 Shares Authorized
8,493,648 and 7,817,534 Shares Issued and
Outstanding, at December 31, 1997 and 1996, Respectively..................... 84,936 78,175
Additional Paid-in Capital..................................................... 54,137,777 45,012,798
Retained Earnings.............................................................. 20,623,783 17,418,205
---------------- -----------------
74,846,496 62,509,178
---------------- -----------------
$ 241,597,596 $ 245,367,779
================ =================
<FN>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</FN>
</TABLE>
F-3
<PAGE> 64
<TABLE>
<CAPTION>
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995
------------------ ----------------- ---------------
<S> <C> <C> <C>
Revenues:
Rental Revenues (Note 2)...................................................$ 41,851,081 $ 41,276,684
Fee Based, primarily from Affiliates (Note 12)............................. 15,847,032 14,164,312 $ 15,906,553
Interest, Principally from Unconsolidated Partnerships (Note 12)........... 10,680,767 8,897,233 4,361,497
Income from Disposal of Assets-Net......................................... 1,988,611 962,761 3,408,379
------------------ ----------------- ---------------
70,367,491 65,300,990 23,676,429
------------------ ----------------- ---------------
Expenses:
Property Operating and Maintenance......................................... 14,883,691 16,980,888
Real Estate Taxes and Insurance............................................ 4,060,311 4,148,545
Property Management........................................................ 12,339,727 9,366,777 8,667,358
Administration............................................................. 5,446,969 5,030,967 4,399,349
Performance Equity Plan (Note 7)........................................... 6,280,500 0 0
Nonrecurring Costs (Note 9)................................................ 827,407 242,899 1,537,073
Interest - Non Recourse Mortgages (Note 5)................................. 13,769,562 14,131,780 0
Interest - Corporate Debt (Note 4)......................................... 657,349 1,098,333 1,522,087
Depreciation and Amortization (Note 2)..................................... 6,526,863 5,514,571 537,849
------------------ ----------------- ---------------
64,792,379 56,514,760 16,663,716
------------------ ----------------- ---------------
Income Before Income Taxes and Extraordinary Item............................. 5,575,112 8,786,230 7,012,713
Provision for Income Taxes (Note 8):
Credited to Additional Paid-in Capital..................................... 1,809,000 3,166,000 2,356,000
Current.................................................................... 380,000 250,000 364,000
------------------ ----------------- ---------------
Income Before Extraordinary Item.............................................. 3,386,112 5,370,230 4,292,713
Extraordinary (Loss) / Gain, Net of Income Tax Benefit/(Provision)
of $115,000 in 1997, $1,015,000 in 1996
and ($510,000) in 1995, Respectively (Note 6)................................. (180,534) (1,614,356) 804,022
------------------ ----------------- ---------------
Net Income....................................................................$ 3,205,578 $3,755,874 $5,096,735
================== ================= ===============
Basic Earnings Per Share:
Income before Extraordinary Item...........................................$ 0.42 $ 0.71 $ 0.59
Extraordinary Item......................................................... (0.02) (0.21) 0.11
------------------ ----------------- ---------------
Net Income.................................................................$ 0.40 $ 0.50 $ 0.70
================== ================= ===============
Diluted Earnings Per Share:
Income before Extraordinary Item...........................................$ 0.41 $ 0.69 $ 0.56
Extraordinary Item......................................................... (0.02) (0.21) 0.11
------------------ ----------------- ---------------
Net Income.................................................................$ 0.39 $ 0.48 $ 0.67
================== ================= ===============
<FN>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</FN>
</TABLE>
F-4
<PAGE> 65
<TABLE>
<CAPTION>
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Common Stock
---------------------------- Additional Retained
Shares Amount Paid-in Capital Earnings Total
------------- -------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1995................................. 6,817,254 $ 68,173 $ 34,614,374 $ 8,565,596 $ 43,248,143
Shares issued in 1995, principally in connection
with the claims resolution process (Note 1) ......... 366,708 3,667 (3,667)
Exercise of options under Non-Qualified Stock
Option Plan (Note 7)................................. 30,606 306 34,910 35,216
Less: Treasury Shares Issued to Rental Properties and
subsidiaries (Note 1).......................... (8,248) (82) 82
Credit from utilization of pre-confirmation tax
benefits (Note 8).................................... 2,866,000 2,866,000
Net Income for the year ended December 31, 1995...... 5,096,735 5,096,735
------------- -------------- --------------- -------------- --------------
Balance, December 31, 1995............................... 7,206,320 72,064 37,511,699 13,662,331 51,246,094
Shares issued in 1996, in connection with the claims
resolution process (Note 1) ......................... 13,340 133 (133)
Shares issued in connection with Lexford Acquisition
(Note 1)............................................. 1,400,000 14,000 13,986,000 14,000,000
Contingent........................................ (900,000) (9,000) (8,991,000) (9,000,000)
Exercise of options under Non-Qualified Stock
Option Plan (Note 7)................................. 68,616 686 60,985 61,671
Restricted stock compensation awards and Director
Restricted Stock Plan................................ 32,334 323 325,546 325,869
Less: Treasury Shares primarily from the redemption
in 1996 of stock held by Unconsolidated
Partnerships .................................. (3,076) (31) (31,299) (31,330)
Credit from utilization of pre-confirmation tax
benefits (Note 8).................................... 2,151,000 2,151,000
Net Income for the year ended December 31, 1996...... 3,755,874 3,755,874
------------- -------------- --------------- -------------- --------------
Balance, December 31, 1996............................... 7,817,534 78,175 45,012,798 17,418,205 62,509,178
Shares issued in 1997, in connection with the claims
resolution process (Note 1).......................... 22,264 222 (222)
Exercise of options under Non-Qualified Stock
Option Plan (Note 7)................................. 18,264 183 37,595 37,778
Stock Compensation and Director Restricted Stock
Plan, Net of 267,334 Shares subject to Vesting
Restrictions (Note 7)................................ 635,586 6,356 7,393,606 7,399,962
Credit from utilization of pre-confirmation tax
benefits (Note 8).................................... 1,694,000 1,694,000
Net Income for the year ended December 31, 1997...... 3,205,578 3,205,578
------------- -------------- --------------- -------------- --------------
Balance, December 31, 1997............................... 8,493,648 $ 84,936 $ 54,137,777 $ 20,623,783 $ 74,846,496
============= ============== =============== ============== ==============
<FN>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</FN>
</TABLE>
F-5
<PAGE> 66
<TABLE>
<CAPTION>
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995
------------- -------------- --------------
<S> <C> <C> <C>
Cash flows provided by/(used in) Operating activities:
Management and Investment Management activities:
Cash received from Fee Based activities..............................................$ 20,046,613 $ 22,414,166 $ 22,173,861
Interest and Other Revenues received from Unconsolidated Partnerships................ 12,797,325 9,074,008 4,965,246
Cash receipts -- other............................................................... 1,913,305 2,170,253 3,261,207
Cash paid to Vendors, Suppliers and Employees........................................ (22,337,316) (21,784,246) (21,784,640)
Interest paid on Corporate Debt...................................................... (593,913) (1,147,593) (1,554,454)
Income Taxes paid - City and State................................................... (285,382) (239,145) (234,436)
Taxes paid, other than Income Taxes.................................................. (108,231) (76,575) (553,140)
Payments related to nonrecurring items............................................... (342,361) (2,221,248) (705,075)
------------- -------------- --------------
11,090,040 8,189,620 5,568,569
------------- -------------- --------------
Rental Property activities:
Cash received from Rental activities................................................. 41,586,891 41,297,937 0
Cash paid on Rental activities....................................................... (17,757,630) (19,855,056) 0
Real Estate Taxes.................................................................... (3,254,401) (3,406,946) 0
Interest paid on Mortgages........................................................... (13,579,541) (13,517,318) 0
------------- -------------- --------------
6,995,319 4,518,617 0
------------- -------------- --------------
Net Cash provided by Operating activities............................................... 18,085,359 12,708,237 5,568,569
------------- -------------- --------------
Cash Flow provided by/(used in) Investing activities:
Management and Investment Management Activities:
Proceeds from Sale of Assets and Other............................................. 2,869,955 1,016,334 3,787,441
Capital Expenditures............................................................... (1,191,992) (422,853) (397,519)
Advances to Unconsolidated Partnerships - net...................................... (992,427) (2,556,807) (8,565,119)
Acquisition of Real Estate......................................................... 0 0 (1,864,736)
Investments in Unconsolidated Partnerships......................................... (4,696,916) 0 0
Investment in Management Contracts................................................. (1,700,000) 0 0
Rental Property activities:
Net cash flow provided by Rental activities during period
Held for Sale (net of Interest paid of $13,692,045 in 1995)..................... 0 0 3,037,826
Capitalized Refinancing Costs...................................................... 0 (1,687,492) 0
Funding of Escrows................................................................. 290,805 (41,279) 0
Capital Expenditures............................................................... (2,385,951) (681,639) 0
------------- -------------- --------------
Net Cash used in Investing activities................................................... (7,806,526) (4,373,736) (4,002,107)
------------- -------------- --------------
Cash Flows provided by/(used in) Financing activities:
Management and Investment Management activities:
Proceeds from the exercise of Stock Options........................................ 37,778 61,671 35,216
Redemption of Stock held by Unconsolidated Partnerships............................ 0 (31,330) 0
Proceeds from Corporate Debt and Other............................................. 0 0 21,000,505
Principal payments on Corporate Debt and Other..................................... (8,035,774) (7,052,484) (21,859,553)
Rental Property activities:
Proceeds from Mortgage Debt........................................................ 7,428,500 47,442,961 0
Payments on Mortgages - principal amortization..................................... (2,124,904) (2,139,137) (2,150,733)
Payments on Mortgages - lump sum................................................... (8,608,664) (45,775,047) (479,554)
------------- -------------- --------------
Net Cash used in Financing activities:.................................................. (11,303,064) (7,493,366) (3,454,119)
------------- -------------- --------------
Increase/(Decrease) in Cash............................................................. (1,024,231) 841,135 (1,887,657)
Cash at Beginning of Year............................................................... 3,593,121 2,751,986 4,639,643
------------- -------------- --------------
Cash at End of Year.....................................................................$ 2,568,890 $ 3,593,121 $ 2,751,986
============= ============== ==============
<FN>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</FN>
</TABLE>
F-6
<PAGE> 67
<TABLE>
<CAPTION>
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995
---------------- -------------- ----------------
<S> <C> <C> <C>
Reconciliation of Net Income to Net Cash
Provided By Operating Activities:
Net Income.................................................................$ 3,205,578 $ 3,755,874 $ 5,096,735
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation .......................................................... 5,426,309 5,111,068 496,392
Amortization........................................................... 1,100,554 403,503 41,457
Provision for Losses on Accounts Receivable............................ 389,361 503,421 1,138,869
Income from Disposal of Assets -- Net.................................. (1,988,611) (962,761) (3,408,379)
(Gain) / Loss on Debt Restructuring.................................... 295,534 2,629,356 (1,314,022)
Provision for Income Taxes credited to Additional Paid-in Capital...... 1,694,000 2,151,000 2,866,000
Stock Compensation credited to Additional Paid-in Capital.............. 7,399,962 325,869 0
Changes in Operating Assets and Liabilities:
Investments in and Advances to Unconsolidated Partnerships........... 1,949,767 (94,014) (390,570)
Accounts Receivable and Other........................................ (339,386) (4,339,533) (17,039)
Funds Held in Escrow................................................. 1,832,273 (4,857,423) 595,256
Accounts Payable and Other Liabilities............................... (2,879,982) 8,081,877 463,870
---------------- -------------- ----------------
Net Cash Provided by Operating Activities....................................$ 18,085,359 $ 12,708,237 $ 5,568,569
================ ============== ================
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
In 1995, the Company acquired four Rental Properties primarily financed with
$4,770,000 of first mortgages on the properties.
In June 1995, the Company purchased from a mortgage lender the non-recourse
mortgages on one Unconsolidated Partnership and four Rental Properties. The
mortgages totaled $8.8 million and were acquired for $7.8 million. The Company
financed the acquisition with a $7.8 million note payable to the mortgage
lender. The note was repaid in June 1996.
In 1996, the Company granted deeds in lieu of foreclosure to the mortgagee for
three Rental Properties. The properties had an aggregate carrying value of $3.9
million. In 1995 the Company granted deeds in lieu of foreclosure to the
mortgagees for certain Rental Properties. The properties had an aggregate
carrying value of $3.5 million. No significant gain or loss was recognized on
these transactions because the assets and the non-recourse mortgages on each of
these Rental Properties had been recorded in equal amounts.
Effective August 1, 1996, the Company acquired Lexford Properties, Inc. through
a merger with a wholly owned subsidiary of the Company. The Company issued
1,400,000 shares of its Common Stock (valued at $14,000,000) in consideration of
the acquisition; however 900,000 of the shares issued (valued at $9,000,000) are
subject to forfeiture, in whole or in part, if the Company's combined property
management operations fail to achieve certain profitability criteria on or
before the end of the Company's 1999 fiscal year.
In October 1997 the Company sold two Rental Properties. The buyer assumed the
mortgages with a carrying value of $2.3 million.
In 1997 and 1996, all interest incurred was expensed. In 1995 the interest
incurred on the Rental Properties was capitalized as the properties were Held
for Sale, while interest on corporate debt was expensed (SEE NOTE 2).
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-7
<PAGE> 68
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
The principal business of Lexford Residential Trust, formerly
Lexford, Inc. and Cardinal Realty Services, Inc., and its
subsidiaries (the "Company") is the ownership and management of
multi-family apartment properties. The Company changed its name in
October 1997 to emphasize its new executive and property management
personnel and to eliminate the negative stigma associated with the
"Cardinal" name due to its bankruptcy filing in 1989. The Company is
also involved in the acquisition and redevelopment of multifamily
apartment properties. The Company holds an ownership interest in
apartment communities either as (i) the sole owner of various
limited partnerships or subsidiaries which own apartment communities
(the "Rental Properties" or "Wholly Owned Properties"), or (ii) the
general partner in various limited partnerships which own apartment
communities (the "Unconsolidated Partnerships" or "Syndicated
Partnerships"). The Rental Properties and the apartment communities
owned by the Unconsolidated Partnerships are collectively referred
to as the "Properties". The Company's general partner interests in
the Unconsolidated Partnerships ranges from 1.0% to 10.0%, but
typically 9.0% to 10.0%. The limited partnership interests in the
Unconsolidated Partnerships are substantially all owned by unrelated
third party investors. The Company also has receivables, typically
in the form of second mortgages, from the Unconsolidated
Partnerships that generate a majority of the interest income
recognized by the Company.
The majority of the Properties are located in the midwest and
southeast United States, with the heaviest concentrations in
Florida, Ohio, Georgia, Indiana, Michigan and Kentucky. The typical
Property is comprised of multiple single story buildings with
studio, one and two bedroom apartments. Substantially all of the
Properties have non-recourse first mortgage indebtedness which is
owed to financial institutions. The Company is not dependent for its
revenues on any particular Property and the loss of any Property
would not be material to the Company's financial position.
Geographic distribution of the Properties also minimizes the
Company's exposure to local economic conditions.
The Company has historically engaged in and derived revenues from,
two distinct businesses: the real estate investment business in
which it owns and operates multi-family residential real estate
("Investment Management" or "Real Estate Investment Business") and
the real estate services business ("Management Services" or "Real
Estate Services Business") in which it provides fee-based management
and other services to multi-family apartment communities, including
services to properties in which the Company does not have an
ownership interest ("Third Party Owners") and their residents.
F-8
<PAGE> 69
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Investment Management
The objective of the Company's Investment Management division is to
maximize the value of its real estate holdings and its returns on
real estate investments. The Company performs these functions both
with respect to the Rental Properties as well as the Unconsolidated
Partnerships. The Company strives to obtain and maintain the best
available financing for the Properties and to maximize the
Properties' operating performance. The Company evaluates the
performance of all real estate holdings to identify investment
requirements, under-performing Properties or those that can be sold
at an attractive price relative to their performance.
The Company's Investment Management division, acting in the
Company's capacity as general partner of the Unconsolidated
Partnerships, provides asset management services to the
Unconsolidated Partnerships. In addition, the Company's Investment
Management division performs the following services for the accounts
of the co-owners (limited partners) of the Unconsolidated
Partnerships: informational and financial reporting services
(including tax return preparation and provision of tax return
information to the limited partners) and capital and financial
planning (including determination of reserves, funding of capital
requirements and administration of capital distributions to
partners).
Management Services
The Company's Management Services division is charged with the
conduct of the Company's property management business. The Company's
property management business involves all traditional elements of
third party property management including: day-to-day management and
maintenance of multi-family residential apartment properties,
attracting and retaining qualified residents, collecting rents and
other receivables from residents, providing cash management services
for rental revenues, security deposits, taxes and insurance and
deferred maintenance escrows, and compiling and furnishing
information to property owners.
Effective August 1, 1996, the Company acquired Lexford Properties,
Inc. ("Lexford Properties") by merger of a wholly owned subsidiary
of the Company with and into Lexford Properties. On that date,
Lexford Properties became a wholly owned subsidiary of the Company.
Lexford Properties has been engaged in the business of third party
property management services to Third Party Owners since commencing
business operations in June 1988. Lexford Properties has succeeded
to the operation of the Company's Management Services Division.
F-9
<PAGE> 70
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Lexford Properties also operates an adjunct business which the
Company refers to as "Preferred Resource" (formerly referred to as
Ancillary Services or Preferred Vendor). The Preferred Resource
business currently provides assistance to most of the Properties
managed by Lexford Properties, in the acquisition of needed parts
and supplies and the management of a coordinated buying group
enjoying substantial volume discounts. In consideration of these
services for the benefit of the Unconsolidated Partnerships, the
Company generates income by retaining some portion of discounts
earned. In addition, Preferred Resource provides services to
residents such as renter's insurance.
Fresh Start Accounting
The Company adopted a method of accounting referred to as fresh
start ("Fresh Start") reporting as of September 11, 1992 ("The
Effective Date") as a result of the Company's judicial plan of
reorganization (the "Plan of Reorganization"). The Company prepared
financial statements on the basis that a new reporting entity was
created with assets and liabilities recorded at their estimated fair
values as of the Effective Date. At the Effective Date, to the
extent the non-recourse debt on certain Rental Property assets
exceeded the estimated fair value of the Rental Property, the
Company reduced the contractual amount of the related non-recourse
first mortgage debt by the amounts of the deficiency (the "Mortgage
Deficiencies"). The contractual mortgage balance, net of any
applicable Mortgage Deficiency, is referred to as the "Carrying
Value" of the mortgage. In addition, the Plan of Reorganization
provided for the issuance of the Company's common stock in
satisfaction of claims. In accordance with the Plan of
Reorganization, a total of 6,645,246 shares were issued to satisfy
claimants in the bankruptcy case. During 1997, 22,264 shares were
released to claimants upon final resolution of all claims.
F-10
<PAGE> 71
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Lexford Properties Acquisition
Effective August 1, 1996 the Company acquired Lexford Properties by
way of a merger (the "Lexford Merger") of a wholly owned subsidiary
of the Company with and into Lexford Properties. The acquisition was
accounted for as a purchase. The terms of the Lexford Merger
provided that the Company would succeed to the ownership of all of
the issued and outstanding stock of Lexford Properties and the
shareholders of Lexford Properties would receive 1,400,000 shares of
restricted, newly issued Common Stock. For purposes of the Lexford
Merger, the Common Stock was valued at $10 per share. $9.0 million,
or 900,000 shares, of the purchase price is subject to forfeiture in
whole or in part in the event Lexford Properties does not achieve
certain profitability criteria by December 31, 1999. These shares
are held in escrow pending release or forfeiture. If and when
Lexford Properties attains some or all of the profitability criteria
the corresponding number of shares (up to all 900,000 shares)
subject to forfeiture will be released without contingency and the
Company will record the additional purchase price. The Lexford
Properties shareholders received 500,000 shares of Common Stock free
of contingencies. The 900,000 shares subject to forfeiture are not
reflected in the Shareholders' Equity section of the Company's
Consolidated Balance Sheets nor in the Consolidated Statements of
Shareholders' Equity presented herein (SEE NOTE 14).
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
Fair Value of Financial Instruments
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of FASB
Statement No. 107, Disclosure About Fair Value of Financial
Instruments. The fair value of Cash and Funds Held in Escrow is
equal to their respective carrying amounts. For Investments in and
Advances to Unconsolidated Partnerships, the Company used the Fresh
Start accounting methodology used at the Effective Date to estimate
the value at December 31, 1997 and 1996, which value approximated
$140.3 million and $133.4 million, respectively. Such methodology is
generally based on estimates of the fair market value of the
apartment communities owned by the Unconsolidated Partnerships, less
related indebtedness senior to the Company's investments and
advances. The Investments in and Advances to Unconsolidated
Partnerships consist substantially of second mortgage loans
receivable, whose ultimate repayment is subject to a number of
variables, including the performance and value of the underlying
real estate property and the ultimate timing of repayments of the
receivables. Considerable judgment is required in the interpretation
of market data to develop estimates of fair value, accordingly, the
estimates are not necessarily indicative of the amounts that could
be realized or would be paid in a current market exchange. The
effect of using different market assumptions and/or estimation
methodologies may be material to the estimated fair value amounts
(SEE NOTE 3).
F-11
<PAGE> 72
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
The carrying value of the amounts comprising the Company's corporate
debt as described in Note 4 approximate their fair value based upon
the Company's current borrowing rates for similar types of borrowing
arrangements. The carrying amount of accrued interest approximates
its fair value.
As further described in Note 5, at December 31, 1997 mortgages on
the Company's Rental Properties in the amount of $142.6 million had
contractual balances totaling $150.3 million (resulting in an
aggregate Mortgage Deficiency of $7.7 million). Interest rates on
the mortgages ranged from 7.0% to 10.0% with rates being fixed on
approximately $142.1 million of the contractual balances (SEE NOTE
5). The Carrying Value of the amounts comprising the mortgages on
Rental Properties as described in Note 5, approximate their fair
value based upon the Company's borrowing rates for similar types of
mortgage debt.
Basis of Presentation
The consolidated financial statements include the accounts of
Lexford Residential Trust and its wholly owned subsidiaries, and all
entities which the Company has majority interest or control. All
significant intercompany balances and transactions (except for Fee
Based Revenues and related expenses generated from Rental Properties
in 1995) have been eliminated in consolidation. Total Revenues from
Rental Properties (during the period such properties were held for
sale) amounted to $3.6 million for the year ended December 31, 1995.
Any gross profit on such revenues has been eliminated in
consolidation (SEE NOTE 2).
Reclassification
Certain amounts in the 1995 and 1996 Consolidated Financial
Statements have been reclassified to conform to the 1997
presentation.
Rental Properties (previously Held for Sale)
During 1995 and prior years, the Company classified the Rental
Properties as Held for Sale. However, based upon mortgage debt that
had been restructured with favorable amortization terms, combined
with improved net operating income and cash flow performance,
management decided to retain the Rental Properties for investment.
Therefore, commencing January 1, 1996, the Company changed the
classification of the Rental Properties and discontinued the Held
for Sale accounting treatment. The Rental Properties are carried at
lower of cost or fair value and depreciated over their estimated
remaining useful lives, typically approximately 30 years, using the
straight-line method for financial reporting purposes and tax
purposes. The Company capitalizes interior replacement costs and
major building exterior improvements, and depreciates the assets
over their estimated useful lives ranging from five to 20 years (SEE
NOTE 2). The Company evaluates its Rental Properties periodically
for indicators of impairment, including recurring operating losses
and other significant adverse changes in the business climate that
affect the recovery of the recorded asset value. If Rental Property
is considered impaired, a loss is provided to reduce the net
carrying value of the asset to its estimated fair value. Management
is not aware of any indicator that would result in any significant
impairment loss.
F-12
<PAGE> 73
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Investments in and Advances to Unconsolidated Partnerships
Investments in and Advances to Unconsolidated Partnerships represent
the Company's general partners' interest and advances to
non-controlled partnerships which own multi-family apartment
communities. The carrying value represents the allocation of the
estimated fair value of the underlying real estate assets as of the
Effective Date or, if later, date of purchase or investment and, as
described in Note 3, the contractual amounts of the receivables are
significantly more than the recorded amounts. These receivables
generally include long-term second mortgages and other receivables.
In addition, subsequent to the Effective Date, the Company has made
advances to the Unconsolidated Partnerships. These advances
primarily relate to operating needs and supplemental funding for
refinancing transactions, and bear interest at prime plus one
percent. Interest is accrued on the recorded values of the second
mortgages and certain of the other receivables based upon
contractual interest rates, and allowances are provided for
estimated uncollectible interest based upon the underlying
Properties' net cash flows. In certain instances, cash flow received
in excess of accrued second mortgage interest on the recorded values
of the second mortgages is recorded as income. The Company is also
entitled to receive incentive management fees and supplemental
second mortgage interest based upon certain levels of cash flows of
certain of the underlying Properties. Also, in the event the
underlying Properties are sold or refinanced, the Company is
generally entitled to a participation interest in the net proceeds,
as a general partner and/or a second mortgage holder. The
realization of the Investments in and Advances to Unconsolidated
Partnerships is dependent on the future operating performance of the
Unconsolidated Partnerships.
Prior to November 1, 1997, the Company accounted for its investments
by the cost method. Effective November 1, 1997, based on the
Company's board of directors decision to seek to acquire ownership
of third party equity interests in substantially all of the
Unconsolidated Partnerships, the Company began accounting for its
investments on the equity method. The Company's share of net income
or loss of the Unconsolidated Partnerships is classified with Fee
Based Revenues in the Consolidated Statement of Income (SEE NOTES 3
AND 14).
In December 1997, the Company purchased a non-controlling interest
in certain limited partnerships that have an ownership interest
and/or other investments in 15 properties, comprising approximately
3,400 units. The purchase price of $3.3 million is included in
Investments in and Advances to Unconsolidated Partnerships at
December 31, 1997. The Company is accounting for these investments
under the equity method.
Furniture, Fixtures and Other, Net
Furniture and fixtures, net of accumulated depreciation of $2.5
million and $1.8 million at December 31, 1997 and 1996,
respectively, are recorded at cost and are depreciated over their
estimated useful lives ranging from three to 10 years, using the
straight-line method for financial reporting purposes and various
accelerated or straight-line methods for income tax purposes.
F-13
<PAGE> 74
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Funds Held in Escrow
The amounts at December 31, 1997 and 1996 include funds of $6.7
million and $7.0 million, respectively, escrowed by Rental
Properties for improvements and deferred maintenance, real estate
taxes, insurance and resident security deposits. In addition, the
Company is holding $2.0 million and $3.0 million, at December 31,
1997 and 1996, respectively, as funds held primarily for payment of
insurance premiums which are collected from the Properties. At
December 31, 1997 and 1996 the Company's Funds Held in Escrow also
includes $3.2 million and $4.0 million, respectively, of funds
received from the settlement of litigation brought against the
Company's former insurance carrier to prosecute policy claims for
termite infestation losses at certain of the Properties. These funds
are being used to pay additional litigation costs associated with
the Company's prosecution of claims against its former excess
coverage insurance carrier. The Company's Other Liabilities includes
$1.9 million and $3.4 million at December 31, 1997 and 1996,
respectively, representing the settlement proceeds from the
litigation allocable to certain Unconsolidated Partnerships.
Revenue Recognition
Rental revenue is recognized as income in the period earned.
Intangible Assets
Intangible Assets at December 31, 1997 and 1996 is primarily
comprised of goodwill and management contracts, net of accumulated
amortization of approximately $816,700 and $129,600, respectively.
In 1997, the Company acquired management contracts on a group of
affiliated properties for $1.7 million. The goodwill and management
contracts related to the Lexford Properties Acquisition is being
amortized on the straight line basis over 25 years and 10 years,
respectively. In the third quarter of 1997, the Company recorded a
charge of approximately $364,000 as an amortization adjustment to
the value assigned to the third party management contracts acquired
with the Lexford Properties Acquisition. The adjustment was based
upon the significant decline in the number of third party management
contracts. The management contracts purchased in 1997 are being
amortized on the straight line basis over seven years.
Intangible Assets also includes deferred financing costs at December
31, 1997 and 1996 of $2.5 million and $2.7 million, respectively.
The costs relate to mortgage refinancings on the Rental Properties
and are amortized over the terms of the respective loans.
F-14
<PAGE> 75
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Earnings Per Share
In 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings Per Share. Statement 128 replaced the calculation
of primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic
earnings per share excludes any dilutive effects of options,
warrants and convertible securities. Diluted earnings per share is
very similar to the previously reported fully diluted earnings per
share. All earnings per share amounts for all periods have been
presented and, where appropriate, restated to conform with the
Statement 128 requirements. Also see Note 14 - Subsequent Events
regarding two for one stock exchange.
The following table shows the amounts used in computing basic and
diluted earnings per share as well as weighted average numbers of
shares outstanding and the effect on income of restricted common
stock and stock options with dilutive potential.
<TABLE>
<CAPTION>
1997 1996 1995
--------------- --------------- ----------------
<S> <C> <C> <C>
Numerator for Basic and Diluted Earnings Per Share:
Income before Extraordinary Items $ 3,386,112 $ 5,370,230 $ 4,292,713
Extraordinary Item (180,534) (1,614,356) 804,022
--------------- --------------- ----------------
Net Income 3,205,578 3,755,874 5,096,735
=============== =============== ================
Denominator:
Denominator for Basic Earnings Per Share -
Weighted Average Shares 8,071,970 7,537,298 7,256,100
Effect of Dilutive Securities:
Stock Options 171,862 192,166 260,956
Time Vesting Restricted Stock Awards 70,084 95,210 69,000
--------------- --------------- ----------------
Dilutive Potential Common Shares 241,946 287,376 329,956
--------------- --------------- ----------------
Denominator for Diluted Earnings Per Share -
Adjusted Weighted Average Shares 8,313,916 7,824,674 7,586,056
=============== =============== ================
Basic Earnings Per Share:
Income Before Extraordinary Item $ 0.42 $ 0.71 $ 0.59
Extraordinary Item (0.02) (0.21) 0.11
--------------- --------------- ----------------
Net Income $ 0.40 $ 0.50 $ 0.70
=============== =============== ================
Diluted Earnings Per Share:
Income Before Extraordinary Item $ 0.41 $ 0.69 $ 0.56
Extraordinary Item (0.02) (0.21) 0.11
--------------- --------------- ----------------
Net Income $ 0.39 $ 0.48 $ 0.67
=============== =============== ================
</TABLE>
F-15
<PAGE> 76
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
In August, 1996, the Company issued 1,400,000 shares of Common Stock
in connection with the Lexford merger, 900,000 shares of which
remain subject to forfeiture in whole or in part. The 900,000 shares
subject to forfeiture are contingent upon achieving certain
profitability criteria. The 900,000 contingent shares are excluded
from the weighted average shares outstanding because profitability
criteria have not been met (SEE "LEXFORD PROPERTIES ACQUISITION").
The weighted average shares outstanding excludes 267,334 shares of
Common Stock awarded to certain officers which vesting is contingent
upon the Company achieving certain performance criteria that were
not met as of December 31, 1997. In addition, weighted average stock
options for 8,000 shares were excluded from weighted average shares
outstanding since the exercise price exceeded the average stock
price. For additional disclosures regarding outstanding employee
stock options, SEE NOTE 7.
In February 1997, the Company retired approximately 420,600 shares
that were previously held as treasury shares.
NOTE 2: RENTAL PROPERTIES
During 1995 and prior years, the Company had attempted to market and
sell the Rental Properties and classified the Rental Properties as
Held for Sale. While the Rental Properties were held for sale, the
results of operations from the Rental Properties were credited to
the carrying value of the real estate and no revenues, operating
expenses or depreciation were included in the Consolidated
Statements of Income. Cash flows from the Rental Properties prior to
1996 were classified as Cash Flow Provided by Investing Activities.
Commencing January 1, 1996, based upon management's decision to
retain the Rental Properties for investment, the operations,
including a provision for depreciation, of the Rental Properties
have been fully consolidated in the Company's Consolidated
Statements of Income. Further, the cash flows of the Rental
Properties have been reclassified as Cash Flows Provided by
Operating Activities.
F-16
<PAGE> 77
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 2: RENTAL PROPERTIES (cont'd)
Condensed combined balance sheets, with intercompany payables and
receivables eliminated, of the Company's 111 and 113 Rental
Properties as of December 31, 1997 and 1996, respectively, are as
follows:
<TABLE>
<CAPTION>
1997 1996
------------------ -----------------
<S> <C> <C>
ASSETS
Net Rental Properties $ 152,217,430 $ 157,091,545
Cash 2,619,761 3,322,494
Accounts Receivable 817,948 324,772
Funds Held in Escrow 6,689,337 6,980,142
Intangible Assets 2,492,029 2,721,365
Prepaids and Other 310,292 832,132
------------------ -----------------
$ 165,146,797 $ 171,272,450
================== =================
LIABILITIES AND EQUITY
Non Recourse Mortgages Payable:
Contractual $ 150,284,725 $ 157,381,603
Mortgage Deficiency (7,647,851) (9,325,586)
------------------ -----------------
142,636,874 148,056,017
Accounts Payable 561,203 1,160,426
Accrued Interest and Real Estate Taxes 2,825,450 2,961,795
Other Accrued Expenses 1,175,438 1,337,083
Other Liabilities 959,987 683,202
------------------ -----------------
148,158,952 154,198,523
Equity 16,987,845 17,073,927
------------------ -----------------
$ 165,146,797 $ 171,272,450
================== =================
</TABLE>
Condensed consolidated statement of income of the 116 Rental
Properties while Held for Sale, including intercompany expenses, for
the year ended December 31, 1995 is as follows:
<TABLE>
<CAPTION>
1995
------------------
<S> <C>
Rental Revenues $ 40,000,678
Operating Expenses (18,691,062)
------------------
Net Operating Income 21,309,616
Improvements and Replacement Expense (2,213,586)
Improvements and Replacement Expense funded from Escrows (1,746,156)
Interest Expense (contractual interest of approximately $14,562,000) (13,549,258)
Other Expenses (1,464,630)
Reorganization Expenses (96,227)
------------------
Income, less expenses, excluding depreciation $ 2,239,759
==================
</TABLE>
F-17
<PAGE> 78
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 3: INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED PARTNERSHIPS
The Investments in and Advances to Unconsolidated Partnerships net
of allowances of $2.6 million and $1.6 million, respectively, are
comprised of the following major components:
1997 1996
--------------- --------------
Second Mortgage Notes $35,778,288 $36,450,176
Advances, since the Effective Date 14,770,765 14,271,906
Investments in Unconsolidated Partnerships 3,395,474 0
Other, including accrued interest 3,166,847 3,888,339
--------------- --------------
$57,111,374 $54,610,421
=============== ==============
The majority of the second mortgage notes bear interest at 6%.
Interest income is accrued based upon the Fresh Start value of the
second mortgage notes, as described in Note 1. The advances
currently bear interest at prime plus 1%. At December 31, 1997 and
1996, the contractual obligations of the Unconsolidated Partnerships
on account of second mortgages, advances and other payables,
including related interest, aggregated $232.5 million and $238.7
million, respectively. Amounts due under second mortgages are
collateralized substantially by all the real estate assets of the
Unconsolidated Partnerships and are subordinate to the first
mortgage debt. There can be no assurance that the Company will
collect the full carrying value of, or any additional contractual
balances owing under, these receivables.
F-18
<PAGE> 79
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 3: INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED PARTNERSHIPS(cont'd)
Following is a summary of financial position and results of
operations of the 394 Unconsolidated Partnerships at December 31,
1997 and 406 Unconsolidated Partnerships at December 31, 1996 and
1995. The presentation does not include data for 15 additional
Unconsolidated Partnerships in which the Company made initial
investments in December 1997 (SEE NOTE 1 - "INVESTMENTS IN AND
ADVANCES TO UNCONSOLIDATED PARTNERSHIPS")
<TABLE>
<CAPTION>
1997 1996 1995
------------------- ------------------- -------------------
<S> <C> <C> <C>
Real Estate Assets, Net $ 394,138,048 $ 413,430,542 $ 427,165,373
Cash, Funds Held in Escrow and
Resident Receivables 32,117,034 35,821,876 33,579,786
Other Assets 12,721,170 14,650,648 11,610,306
------------------- ------------------- -------------------
Total Assets $ 438,976,252 $ 463,903,066 $ 472,355,465
=================== =================== ===================
Non Recourse Mortgage Debt 437,235,691 456,926,896 457,388,544
Other Liabilities 21,613,975 25,175,139 20,499,327
Amounts Due to the Company 232,511,337 238,676,999 237,098,604
------------------- ------------------- -------------------
$ 691,361,003 $ 720,779,034 $ 714,986,475
------------------- ------------------- -------------------
Net Deficit $ (252,384,751) $ (256,875,968) $ (242,631,010)
=================== =================== ===================
Rental and Other Revenues $ 123,922,337 $ 122,712,181 $ 117,213,041
=================== =================== ===================
Net Loss $ (5,019,247) $ (13,732,614) $ (12,482,318)
=================== =================== ===================
Company's Share of Loss (Equity Method)
November 1 through December 31, 1997 $ (80,644)
===================
</TABLE>
Prior to November 1, 1997 and during 1996 and 1995 the Company's
share of loss relating to its investment in Unconsolidated
Partnerships was not recorded because the Company accounted for the
investment under the cost method (SEE NOTE 1).
F-19
<PAGE> 80
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 4: CORPORATE DEBT
Corporate debt consisted of the following at December 31, 1997 and
1996:
<TABLE>
<CAPTION>
1997 1996
---------------------- ----------------------
<S> <C> <C>
Amended and Restated Revolving Credit Facility
principal payable March 30, 2000;
interest payable monthly in arrears
at Prime minus 1% (7.5% for 1997) $ 2,572,092 $ 0
Reducing Balance Revolving Credit
Agreement - amended in 1997 0 9,110,816
Acquisition Term Debt - principal and interest in monthly
installments of $139,435 through March 31, 2001; interest
at a fixed rate of 7.25% 4,733,283 6,007,232
Other notes payable 56,307 145,220
---------------------- ----------------------
$ 7,361,682 $ 15,263,268
====================== ======================
</TABLE>
On September 30, 1997 the Company entered into an Amended and
Restated Loan and Security Agreement with the Provident Bank
("Bank"). The new revolving credit facility ("Facility"), is for $35
million and represents an increase to and replacement of the former
Provident revolving credit facilities and commitments ("Former
Lines"), consisting of a $3 million working capital revolving credit
facility ("Working Capital Line"), and a $22 million reducing
balance revolving line ("Reducing Line") and a committed $10 million
acquisition line ("Acquisition Line"). The scheduled term of the
Facility expires March 30, 2000, although the Company may elect from
time to time to reduce the Facility and convert all or any portion
of the principal amount outstanding under the Facility into a five
year term loan. Revolving loans under the Facility bear interest
equal to the Bank's prime rate of interest, currently 8.5%, minus
1%. The Facility and Acquisition Term Debt continues to be secured
by all of the Company's assets, subject to the interest of the first
mortgage holder on non recourse mortgage debt of the Rental
Properties. At December 31, 1997 the Company had unrestricted credit
availability of approximately $31.7 million. This amount is net of
$767,400 restricted for unfunded stand-by letters of credit for
1997.
The Company's loan agreements contain restrictive covenants,
including but not limited to, the maintenance of certain net worth,
financial ratios, certain restrictions on incurrence of additional
debt and certain restrictions on acquisitions.
F-20
<PAGE> 81
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 4: CORPORATE DEBT (cont'd)
The Company's annual long-term debt maturities following December
31, 1997 are:
1998 $ 1,419,915
1999 1,503,254
2000 4,162,150
2001 276,363
-------------------
$ 7,361,682
===================
NOTE 5: NON RECOURSE MORTGAGES
In connection with Fresh Start reporting as further described in
Note 1, mortgages on Rental Properties were restated to their
estimated fair value as of the Effective Date. The contractual
principal balances of the mortgages on Rental Properties exceed the
carrying values by $7.7 million and $9.3 million at December 31,
1997 and 1996, respectively. The mortgages are non recourse, are
collateralized by the Rental Properties (generally on a single
Rental Property by Rental Property basis, although a portfolio of
mortgages on 26 Rental Properties are cross-collateralized and
cross-defaulted) and are payable over periods through 2007. At
December 31, 1997 contractual interest rates ranged from 7.0% to
10.0% with fixed rates on approximately $142.1 million of the
outstanding contractual mortgage balances. Interest expense is
recorded using the effective interest method based upon the carrying
value of the mortgage debt. The weighted average effective interest
rate was 8.63% at December 31, 1997. The weighted average
contractual interest rate and term to maturity on the mortgages on
Rental Properties, was 8.61% and 6.2 years at December 31, 1997. The
annual debt service requirement was $15.2 million at December 31,
1997. In addition, ten Rental Properties have second mortgage debt
totaling $1.5 million at December 31, 1997, that requires the
application of all excess cash flow from operations to be applied to
the outstanding principal on such debt. The range of interest rates
and related carrying amounts of mortgages payable at December 31,
1997 is as follows:
Contractual Contractual Carrying
Rate Balance Value
- ---------------------------- ----------------------- -----------------------
Less than 8.0% $ 15,979,531 $ 14,351,759
8.01% - 9.0% 120,960,409 116,421,071
More than 9.01% 13,344,785 11,864,044
----------------------- -----------------------
$ 150,284,725 $ 142,636,874
======================= =======================
F-21
<PAGE> 82
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 5: NON RECOURSE MORTGAGES (cont'd)
Minimum estimated repayment requirements of mortgages for the next
five years based upon the contractual principal balances are as
follows:
Contractual
Amounts
-------------------
1998 $ 10,009,959
1999 4,738,553
2000 7,408,432
2001 22,365,496
2002 9,072,499
Thereafter 96,689,786
-------------------
$ 150,284,725
===================
NOTE 6: EXTRAORDINARY ITEM - REFINANCED MORTGAGE DEBT
During 1997, the Company refinanced mortgages on six Rental
Properties. Mortgage indebtedness on these Rental Properties, with a
contractual value of approximately $7.4 million and a Carrying Value
of approximately $7.1 million, was refinanced with mortgages bearing
a fixed rate of interest ranging from 7.45% to 9.03%, with 25 year
amortization and ten year maturities. Annual debt service on the
affected Rental Properties decreased approximately $18,000. An
extraordinary non-cash loss of approximately $180,000, net of tax
benefits, resulted from the mortgage debt refinancings of the Rental
Properties. The loss arose from the mortgages repaid from refinance
proceeds at the contractual balance which exceeded the Carrying
Value of the mortgages (SEE NOTE 1).
The refinancing of mortgages on the Unconsolidated Partnerships
generated loan fee revenue of approximately $130,000 in 1997 as
compared to $752,000 and $886,000 in 1996 and 1995, respectively.
The fees were based upon a graduated percentage of the new loan
amounts and are classified with Fee Based Revenue in the
Consolidated Statements of Income.
In 1996 and 1995, the Company completed modification or refinancing
transactions on Rental Properties and Unconsolidated Partnerships
which resulted in an extraordinary non-cash loss of $1.6 million,
net of tax benefits in 1996 and an extraordinary gain on discharge
of indebtedness net of closing costs reserves and taxes of
approximately $804,000 in 1995. The loss arose from those mortgages
repaid from refinance proceeds at the contractual balance which
exceeded the Carrying Value of the mortgage (SEE NOTE 1).
F-22
<PAGE> 83
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 7: STOCK BASED COMPENSATION
The company provides stock based compensation to employees and
non-employee directors including stock options, stock awards and
stock in lieu of cash payments under various plans and contractual
arrangements.
Performance Equity Plan
In October 1997, the shareholders of the Company approved the
Company's 1997 Performance Equity Plan (the "Performance Plan"). The
Performance Plan authorizes the grant of restricted stock awards to
certain officers and non-employee directors. The Performance Plan
has a three year term (1997 through 1999), with increasing
performance goals associated with each year of the term. A total of
636,000 shares of restricted Common Stock are available for grants.
On October 7, 1997 the Compensation Committee of the Company's Board
of Directors authorized restricted stock grants for the full 636,000
shares. Vesting under the Performance Plan occurs only upon
attainment of specified performance goals. The performance goals are
stated as percentage increases over base line amounts established,
and as defined, in the Performance Plan approved by shareholders.
Any awards that remain non-vested after the third year will be
forfeited.
In 1997, 424,000 shares awarded under the Performance Plan vested
upon achievement of the performance goals. The vesting of these
shares resulted in a non-cash charge in the fourth quarter of 1997
of approximately $6.3 million.
Incentive Equity Plan and Other Stock Compensation
The Company also has an Incentive Equity Plan (the "Incentive
Plan"), that was established in 1992 and amended with shareholder
approval in 1995, that authorizes the Company's issuance of stock in
connection with stock options and restricted stock awards. The
Incentive Plan, which benefits officers, key employees and
non-employee directors, authorized approximately 1,182,000 shares
for officers and key employees and approximately 280,400 shares for
non-employee directors. At December 31, 1997, 287,036 shares remain
available for officers and key employees and approximately 64,400
shares remain available for grants of stock options to non-employee
directors. The shares of stock available for future options and
awards may be granted at the discretion of the Company's Board of
Directors or its Compensation Committee. Approximately 496,800 of
the 895,200 shares or options previously issued under the Equity
Plan are held by officers and key employees currently employed by
the Company and all of the non-employee director shares or options
issued are held by individuals currently serving as directors.
In 1997, the Company granted to officers and key employees stock
options for the purchase of 72,550 shares, 15,000 shares of
restricted stock, and 18,000 shares of stock with vesting contingent
on certain Company performance criteria. In addition, stock options
for the purchase of 32,000 shares, and 4,000 shares of restricted
stock were granted to non-employee directors in 1997. In addition,
certain officers and key employees received 8,620 shares of stock in
lieu of cash compensation in 1997 and 150,800 shares were issued
under employment agreements.
F-23
<PAGE> 84
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 7: STOCK BASED COMPENSATION (cont'd)
In 1996, the Company granted stock options for 152,000 shares,
including 32,000 to non employee directors, restricted stock awards
for 99,000 shares and deferred stock awards for 76,000 shares. The
restricted stock awards included up to 35,000 shares as a Company
match of shares if purchased by officers by April, 1997, and 64,000
shares which vest ratably over time. The deferred stock awards vest
upon achievement of specified performance criteria.
The shares authorized under the Incentive Plan in 1992 were provided
for in the Plan of Reorganization, prior to the Effective Date.
Therefore these shares were deemed awarded prior to the Effective
Date with no compensation expense recorded for periods subsequent to
the Effective Date. Awards of shares provided for in the amendment
to the Incentive Plan in 1995, depending on the nature of the award,
may be reflected as compensation over the vesting period.
Compensation expense resulting from transactions under this plan and
other stock compensation arrangements was $842,600 and $207,500 for
1997 and 1996, respectively, in addition to the non cash charge
recorded for the Performance Plan. There was no stock compensation
expense in 1995. The weighted average per share value at grant date
of the restricted and deferred stock awards was $14.68 and $9.29 for
1997 and 1996, respectively.
In 1996, the shareholders of the Company approved the director
restricted stock plan (the "Director Plan") that provides for
compensation earned by the directors to be paid, at the option of
the Directors, in whole or in part, in shares of stock in lieu of
cash fees. The Director Plan authorized 100,000 shares, of which
approximately 66,800 shares remain available at December 31, 1997.
In 1997 and 1996 the Company recorded compensation expense of
$276,800 and $118,400, respectively, related to the Director Plan.
Stock Option Valuation
The Company has elected to follow Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB
25") and related interpretations in accounting for its employee and
director stock options, because the alternative fair value
accounting provided for under FASB Statement No. 123, "Accounting
for Stock Based Compensation," ("FASB 123") requires use of option
valuation models that were not developed for use in valuing employee
stock options. Under APB 25, because the exercise price of the
Company's employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is
recognized.
Pro forma information regarding net income and earnings per share is
required by FASB 123, which also requires that the information be
determined as if the Company has accounted for its employee stock
options granted subsequent to December 31, 1994 under the fair value
method of that Statement. The fair value for these options was
estimated at the date of the grant using Black-Scholes option
pricing model.
The following assumptions were utilized in the pricing model: a
weighted average risk free interest rate of 5.6% in 1997 and 6.5% in
1996 and 1995; dividend yield of one percent; volatility factors of
the expected market price of the Company's common stock of 0.248 in
1997 and 0.236 in 1996 and 1995; and a weighted average expected
life of 6.3 years in 1997, seven years in 1996 and eight years in
1995.
F-24
<PAGE> 85
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 7: STOCK BASED COMPENSATION (cont'd)
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restriction and are fully transferable. In addition, option
valuation models require the input of highly subjective assumptions
including the expected stock price volatility. Because the Company's
employee stock options have characteristics significantly different
from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide
a reliable single measure of the fair value of its employee stock
options.
For purposes of pro forma disclosures, the estimated fair value of
the options is amortized over the options vesting period. The
Company's pro forma information follows:
1997 1996 1995
------------- -------------- -------------
Pro forma net income $ 3,026,754 $ 3,629,797 $ 5,090,716
============= ============== =============
Pro forma basic earnings per share $ 0.37 $ 0.48 $ 0.70
============= ============== =============
Pro forma diluted earnings per share $ 0.36 $ 0.46 $ 0.67
============= ============== =============
The following table summarizes the Company's stock option activity,
and related information for the years ended December 31, 1997, 1996
and 1995 (in thousands except for exercise prices):
<TABLE>
<CAPTION>
1997 1996 1995
------------------- ---------------------- ----------------------
Weighted Weighted Weighted
Ave. Ave. Ave.
Exercise Exercise Exercise
Options Price Options Price Options Price
------------------- ---------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at beginning of year 352 $5.45 270 $2.05 270 $1.17
------------------- ---------- ----------- --------- ------------
Options granted 104 $12.27 152 $9.44 35 $8.63
Options exercised (18) $2.07 (68) $0.90 (31) $1.14
Options forfeited (4) $9.59 (2) $1.31 (4) $1.31
------------------- ---------- ----------- --------- ------------
Options outstanding at end of year 434 $7.20 352 $5.46 270 $2.05
=================== ========== =========== ========= ============
Options exercisable at end of year 234 $4.17 176 $2.60 192 $1.11
=================== ========== =========== ========= ============
Weighted Ave. Fair Value of Options $4.15 $3.19 $3.42
Granted during the Year =========== =========== ============
</TABLE>
F-25
<PAGE> 86
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 7: STOCK BASED COMPENSATION (cont'd)
Options awarded have an exercise price equal to or greater than the
market price of the Common Stock at the time of the award, and are
subject to vesting schedules as determined by the Company's Board of
Directors or its Compensation Committee. The options granted expire,
if not exercised, ten years from the date on which the option was
granted. Exercise prices for options outstanding as of December 31,
1997 ranged from $0.71 to $15.50 per share with a weighted average
remaining term of 7.3 years. At December 31, 1997, there were
options outstanding to purchase approximately 152,000 shares at an
exercise price less than $5 and approximately 282,000 shares at an
exercise price in excess of $5.
NOTE 8: INCOME TAXES
The Company and its subsidiaries file a consolidated Federal income
tax return. For financial reporting purposes, the Company follows
FASB Statement No. 109 ("FASB 109"). In accordance with FASB 109,
income taxes have been provided at statutory rates in effect during
the period. Tax benefits associated with net operating loss carry
forwards and other temporary differences that existed at the time
Fresh Start reporting was adopted are reflected as an increase to
Additional Paid-in Capital in the period in which they were
realized.
The provision for income taxes in the Consolidated Statements of
Income (including amounts applicable to extraordinary items) is as
follows:
Years Ended
--------------------------------------------------
1997 1996 1995
--------------- ---------------- ---------------
Current:
Federal $ 0 $ 0 $ 50,000
State 380,000 250,000 314,000
Amounts not payable in cash 1,694,000 2,151,000 2,866,000
--------------- ---------------- ---------------
$ 2,074,000 $ 2,401,000 $ 3,230,000
=============== ================ ===============
The Company's actual income tax payments for the years 1997, 1996
and 1995 were significantly less than the total provision for income
taxes because of available net operating loss carry forwards and
other tax benefits. The amounts included in the provision for taxes
for which no amounts were payable in cash are set forth in the table
above.
F-26
<PAGE> 87
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 8: INCOME TAXES (cont'd)
The effective income tax rates varied from the federal statutory
rates as follows:
1997 1996 1995
------------ ------------ -----------
Federal Tax provision at statutory rates $ 1,787,000 $ 2,094,000 $ 2,832,000
State Income Taxes, Net of Federal Income
Tax Benefit 251,000 165,000 207,000
Other Permanent Differences 36,000 142,000 191,000
------------ ------------ -----------
$ 2,074,000 $ 2,401,000 $ 3,230,000
============ ============ ===========
Effective Income Tax Rate 39.3% 39.0% 38.8%
============ ============ ===========
Significant components of the Company's deferred tax assets and
liabilities are as follows at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
(000s omitted)
------------------------------
1997 1996
-------------- -------------
<S> <C> <C>
Deferred Tax Assets and Other:
Net operating loss carry forwards and other carry forwards $ 22,000 $ 19,000
Suspended passive activity losses 34,000 38,000
Tax basis of assets in excess of Fresh Start estimated fair values 11,000 39,000
-------------- -------------
67,000 96,000
-------------- -------------
Less: valuation allowance (31,000) (24,000)
-------------- -------------
$ 36,000 $ 72,000
============== =============
Deferred Tax Liabilities:
Negative capital accounts $ 33,000 $ 41,000
Tax basis of liabilities in excess of related Fresh Start
estimated fair values 3,000 3,000
Tax basis of assets less than related Fresh Start estimated fair values 0 28,000
-------------- -------------
$ 36,000 $ 72,000
============== =============
</TABLE>
F-27
<PAGE> 88
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 8: INCOME TAXES (cont'd)
The valuation reserve against deferred tax assets has been reduced
by amounts equivalent to the portions of the tax provisions which
are not payable in cash. Corresponding increases have been made to
Additional Paid-in Capital.
As a result of the uncertainties relating to the ultimate
utilization of favorable tax attributes described below, the Company
has provided a valuation allowance for the remaining excess of the
net deferred tax assets as of December 31, 1997 and 1996.
In addition to regular corporate income tax, corporations are
subject to an alternative minimum tax liability to the extent
alternative minimum tax exceeds regular tax. The Company will record
an alternative minimum tax liability in the year that events and
transactions create an alternative minimum tax which is probable of
being paid and can be reasonably estimated by the Company. As of
December 31, 1997, the Company has estimated that it has net
operating loss ("NOL") carry forwards for tax purposes of
approximately $64.9 million which if not utilized, expire in the
years 2001 through 2013. In the event that current or future 5%
shareholders (as defined by the Internal Revenue Code) acquire or
dispose of shares, over a defined time period, representing in the
aggregate 50% or more of the Company's outstanding shares, a
limitation on the use of NOL carry forwards will occur. The Company
has also estimated that it has approximately $101.3 million in
suspended passive activity losses ("PALs") which may be available to
offset future passive and active income. In December 1997 the
Company's Board of Directors accelerated the scheduled termination
date of transfer restrictions with respect to the sale of the
Company's stock. This provision was originally included in the
Company's Restated Articles of Incorporation (which, in turn, were
included within the Plan of Reorganization) to prevent the potential
for an ownership change that would otherwise result in a limitation
in the Company's ability to utilize net operating and passive loss
carryforwards. As contemplated under the Restated Articles of
Incorporation, the Board determined that the transfer restriction
was no longer necessary. The Company's determination of its NOLs,
PALs, and other tax attributes, as well as its ability to utilize
them to reduce taxable income is subject to uncertainties. Although
the Company believes that its determinations concerning its tax
attributes are supportable under applicable tax laws, there can be
no assurance that taxing authorities, upon examination will not
argue to the contrary.
F-28
<PAGE> 89
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 9: NONRECURRING COSTS
In 1997, the Company incurred Nonrecurring Costs totaling
approximately $827,000. Approximately $400,000 of the charge was due
to costs related to the elimination of overlapping functions between
Lexford Properties and the Company's previous management services
operations. In the second half of 1997 the Company recorded a charge
of approximately $427,000 primarily related to costs incurred for
the Form S-11 filing for the proposed spinoff of the Company's
Rental Properties. The Company has withdrawn this filing as it has
determined to maintain its ownership interests in the Rental
Properties and seek to qualify as a REIT under the Internal Revenue
Code (SEE NOTE 14). At December 31, 1997, the Company had deferred
REIT organization costs of approximately $808,000. These costs are
included in Prepaids and Other on the Consolidated Balance Sheet.
In 1995, the Company implemented a corporate restructuring plan and
initiated further restructuring in 1996. The Company recorded a
charge of approximately $243,000 and $1.5 million in 1996 and 1995,
respectively, related to the costs of the restructuring, principally
severance and separation costs. Approximately 26 employees were
released as a result of the restructurings in 1995 and 1996. In 1996
the Company paid $1.7 million of costs related to the 1995 and 1996
restructuring.
NOTE 10: COMMITMENTS AND CONTINGENCIES
Office and Operating Leases
The Company leases corporate office space under an operating lease
which expired in October, 1997 and was extended on a month to month
basis beginning November 1, 1997. The Company has an option for five
additional terms of three years each. The Company is responsible for
the payment of insurance, real estate taxes and operating expenses
of the leased facility (SEE NOTE 12). The Company entered into an
operating lease for its executive offices which expires December,
2004. Lexford Properties leases office space in four cities to
support its third party management operations. Annual rental
requirements are approximately $463,000 in 1998, $282,000 in 1999,
$109,000 in 2000, $102,000 in 2001, $108,000 in 2002 and $235,000
thereafter. The Company also leases various equipment and software,
typically over five years, and management offices under operating
leases which generally have remaining terms of less than one year.
The equipment and software rental requirements are approximately
$322,000 in 1998, $231,000 in 1999, $13,200 in 2000 and $12,000 in
2001. Rent expense for the years ended December 31, 1997, 1996, and
1995, was approximately $1,122,000, $749,000, and $512,000,
respectively.
Mortgage Notes
In December 1997, the Company entered into a mortgage purchase
agreement with a financial institution wherein the lender agreed to
purchase outstanding mortgage notes with a balance of $4.8 million
on certain Unconsolidated Partnerships. As part of the agreement,
the financial institution has a put option whereby the Company has
agreed to purchase the mortgage notes at a discounted amount of $3.6
million.
F-29
<PAGE> 90
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 10: COMMITMENTS AND CONTINGENCIES (cont'd)
Litigation
The Company is involved in various legal actions arising out of the
normal course of its business. Management of the Company, based upon
knowledge of facts and the advice of counsel, believes potential
exposure to loss from legal actions should not result in a material
adverse effect on the Company's consolidated financial position.
NOTE 11: RETIREMENT PLAN
The Company maintains the Cardinal Realty Services, Inc. Savings
Plan (the "Savings Plan") under section 401(k) of the Internal
Revenue Code (the "Code"), to which participants may contribute a
percentage of their base pay and overtime earnings up to limits
established by the Code. The Savings Plan was amended and restated,
effective July 1, 1993, to (i) provide for discretionary matching
contributions by the Company, (ii) provide for immediate vesting in
all Company contributions and (iii) allow loans to participants.
Effective December 31, 1995 the Savings Plan was amended to exclude
highly compensated employees. Effective July 1, 1996, the Savings
Plan was amended to include employees at the Properties as
participants, increase the Company match and to allow highly
compensated employees to participate in the Plan. The Company
contribution amounts to 1% of wages for every 2% of wages
contributed by a participant up to a maximum of the lesser of 3% of
wages or $2,000 per year. In 1997, 1996, and 1995, the Company's
cash contributions amounted to approximately $126,400, $134,000, and
$92,000, respectively. The Company's cash contributions are then
invested in Company stock held by the Savings Plan Trustee.
NOTE 12: RELATED PARTY TRANSACTIONS
The Company is the sole beneficial equity owner of all Rental
Properties and is a general partner in the Unconsolidated
Partnerships. The Company also serves as the management company for
substantially all of the Properties and provides various ancillary
services, including a Preferred Resource purchasing program to the
Properties and renter's insurance to residents. The Company's fee
based revenue, and interest income are derived primarily from
Properties affiliated with the Company. Approximately $1.9 million
and $4.1 million of the Company's accounts receivable are due from
the Unconsolidated Partnerships as of December 31, 1997, and 1996,
respectively.
The Company advanced, net of amounts repaid, to Unconsolidated
Partnerships approximately $992,000, $2.6 million, and $8.6 million
in 1997, 1996 and 1995, respectively. The majority of the advances
relate to operating needs and advances to facilitate the refinancing
of the mortgages on the Properties as described in Note 6. Effective
October 1, 1995, in conjunction with the favorable terms the Company
achieved on its credit facility, the interest rate on these advances
was revised to prime plus one percent from principally prime plus
six percent. The interest rate on advances may be adjusted in the
future based on prevailing market rates.
F-30
<PAGE> 91
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 12: RELATED PARTY TRANSACTIONS (cont'd)
An outside director of the Company is a partner in the law firm
which serves as outside general counsel to the Company. Legal fees
paid related to services provided to the Company by this law firm
were approximately $981,000 in 1997, $286,000 in 1996 and $255,000
in 1995. The Company had accrued expenses of approximately $176,000
and $105,000 to this law firm at December 31, 1997 and 1996,
respectively. In addition, legal fees paid related to debt
restructuring and refinancing services provided by this law firm to
the Rental Properties and Unconsolidated Partnerships were
approximately $99,000 in 1997, $523,000 in 1996, and $739,400 in
1995.
Another outside director of the Company has an ownership interest in
the lessor of the office facility that houses the Company's
operations (SEE NOTE 10).
F-31
<PAGE> 92
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 13: QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
--------------- ----------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Revenues
1997 $ 16,830,272 $ 17,524,626 $ 18,231,947 $ 17,780,646
1996 $ 14,689,011 $ 14,711,256 $ 15,709,041 $ 20,191,682
Income/(loss) before Extraordinary Item
1997 $ 1,276,038 $ 1,655,497 $ 1,840,975 $ (1,386,398)
1996 $ 1,091,350 $ 757,284 $ 887,034 $ 2,634,562
Extraordinary Item, net of Income Taxes
1997 $ 0 $ (180,534) $ 0 $ 0
1996 $ 0 $ 0 $ 0 $ (1,614,356)
Net Income/(Loss)
1997 $ 1,276,038 $ 1,474,963 $ 1,840,975 $ (1,386,398)
1996 $ 1,091,350 $ 757,284 $ 887,034 $ 1,020,206
Earnings per share:<F1>
Basic
Income/(Loss) before Extraordinary Item
1997 $ 0.16 $ 0.21 $ 0.23 $ (0.16)
1996 $ 0.15 $ 0.10 $ 0.12 $ 0.34
Extraordinary Item
1997 $ 0.00 $ (0.02) $ 0.00 $ 0.00
1996 $ 0.00 $ 0.00 $ 0.00 $ (0.21)
Net Income/(Loss)
1997 $ 0.16 $ 0.19 $ 0.23 $ (0.16)
1996 $ 0.15 $ 0.10 $ 0.12 $ 0.13
Diluted
Income/(Loss) before Extraordinary Item
1997 $ 0.16 $ 0.20 $ 0.22 $ (0.16)
1996 $ 0.14 $ 0.10 $ 0.11 $ 0.32
Extraordinary Item
1997 $ 0.00 $ (0.02) $ 0.00 $ 0.00
1996 $ 0.00 $ 0.00 $ 0.00 $ (0.20)
Net Income/(Loss)
1997 $ 0.16 $ 0.18 $ 0.22 $ (0.16)
1996 $ 0.14 $ 0.10 $ 0.11 $ 0.13
<FN>
<F1> The 1996 and the first three quarters of 1997 Earnings per share
amounts have been restated to comply with Statement of Financial
Accounting Standards No. 128, Earnings Per Share. Also see Note 14 -
Subsequent Events regarding two for one stock exchange.
</FN>
</TABLE>
F-32
<PAGE> 93
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
NOTE 14: SUBSEQUENT EVENTS
In December 1997, the Company announced that it would seek to
qualify and elect to be taxed as a REIT in 1998. In connection with
this decision, the Company established a new entity known as Lexford
Residential Trust (the "Trust") and in January 1998 caused the Trust
to file a Form S-4 Registration Statement with the Securities and
Exchange Commission relating to the proposed merger of the Company
with and into the Trust. The Trust expects to be taxed as a REIT. On
March 3, 1998, the shareholders of the Company approved the merger
of the Company with and into the Trust. The terms of the merger
transaction provide that each share of the Company's common stock be
canceled and converted to two common shares of beneficial interest
in the Trust. The merger became effective on March 18, 1998.
Shareholders of the Company who did not vote in favor of the merger
were entitled to exercise dissenter's rights through March 13, 1998.
As of March 18, 1998 the Company had not received notice of the
exercise of any such dissenter's rights. All share and earnings per
common share amounts disclosed in the Consolidated Financial
Statements and the notes thereto have been restated giving
retroactive effect to the two for one stock exchange.
In connection with the Company's decision to elect REIT status, the
Company initiated a plan ("the Consolidation Plan"), the purpose of
which was to minimize third party interests in the entities owning
the Unconsolidated Partnerships. As of March 3, 1998, the Company
has acquired the entire third party ownership interests in 287
Unconsolidated Partnerships (the "Consolidating Properties"). The
Company has made cash payments to former partners of the 287
Unconsolidated Partnerships totaling $21.3 million. The Company
intends to pursue the acquisition of the third party interests in
all or a substantial portion of the remaining Unconsolidated
Partnerships. The Consolidation Plan will significantly change the
financial statements of the Company. The Investments in and Advances
to Unconsolidated Partnerships of $57.1 million at December 31,
1997, and the related interest income derived from such investments
and Fee Based Income earned from managing the properties will be
almost entirely eliminated as the formerly Unconsolidated
Partnerships are consolidated in the financial statements of the
Company. In addition, upon qualification and maintaining REIT
status, the Company will no longer record a provision for income
taxes.
On March 13, 1998, the Company negotiated a settlement with the
prior shareholders of Lexford Properties whereby 300,000 of the
900,000 shares subject to forfeiture were released in exchange for
the forfeiture of the remaining 600,000 shares (see Note 1 "Lexford
Properties Acquisition"). The agreement was a result of the
Company's decision to elect REIT status which would impact the third
party management business and the ability of Lexford Properties to
achieve the profitability criteria necessary for the release of the
shares subject to forfeiture. The release of the 300,000 shares will
result in a $3.0 million charge in the first quarter of 1998.
F-33
<PAGE> 94
SCHEDULE II
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
Allowance for Doubtful Accounts
-------------------------------------------------------
1997 1996 1995
- ---------------------------------------------------------- ---------------- ------------------ -----------------
<S> <C> <C> <C>
Balance at Beginning of Period $ 3,691,117 $ 3,414,943 $ 2,276,074
Add: Charged to Costs and Expenses:
Recovery of Allowances 0 (300,000) 0
Allowances associated with Loan Fees 0 0 291,164
Other Allowances 389,361 803,421 847,705
Less: Account Charge Offs (533,256) (227,247) 0
---------------- ------------------ -----------------
Balance at End of Period $ 3,547,222 $ 3,691,117 $ 3,414,943
================ ================== =================
</TABLE>
F-34
<PAGE> 95
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SCHEDULE III
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------
COLUMN A | COLUMN B | COLUMN C | COLUMN D
- --------------------------------------------------------------------------------------------------------------------------
DESCRIPTION - | | | COSTS CAPITALIZED
(ALL GARDEN APARTMENTS) | ENCUMBRANCES | INITIAL COST TO THE COMPANY | SUBSEQUENT TO ACQUISITION
- --------------------------------------------------------------------------------------------------------------------------
| | |
| AT | |
| AT STATED | BUILDINGS |
| CONTRACTUAL CARRYING | & | CARRYING
PROPERTY NAME ST | VALUE VALUE | LAND IMPROVEMENTS | IMPROVEMENTS COSTS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GLENVIEW AL 1,709,168 1,709,168 178,221 1,784,904 11,948 0
BEL AIRE II FL 1,184,188 435,852 81,451 287,059 7,149 0
BLUEBERRY HILL FL 761,259 761,259 63,610 362,610 38,063 0
CALIFORNIA GARDENS FL 1,160,100 582,868 96,067 521,414 11,725 0
CANTERBURY CROSSING FL 1,422,021 676,003 78,303 385,838 9,360 0
CENTRE LAKE I, II & III FL 4,889,630 4,889,630 1,210,779 3,116,732 68,104 0
FOREST GLEN FL 1,118,325 1,118,325 229,086 994,552 29,840 0
GARDEN TERRACE I FL 612,875 612,875 89,123 801,137 98,214 0
HERON POINTE FL 1,637,264 1,637,264 367,599 1,440,838 62,162 0
HIDDEN ACRES FL 1,674,287 1,674,287 388,349 1,136,083 30,846 0
HILLSIDE TRACE FL 1,088,000 1,088,000 197,277 833,232 5,764 0
HOLLY SANDS II FL 1,054,940 1,054,940 231,970 943,482 78,939 0
JEFFERSON WAY FL 1,045,792 1,045,792 116,366 1,062,590 28,688 0
JUPITER COVE I FL 1,360,455 1,133,250 219,698 805,001 9,439 0
JUPITER COVE III FL 1,434,204 1,434,204 285,929 1,026,413 8,443 0
MARK LANDING I FL 1,329,188 1,329,188 250,827 1,481,543 58,239 0
MIGUEL PLACE FL 1,493,801 1,493,801 237,234 1,125,414 14,504 0
OAK GARDENS FL 2,707,634 1,857,319 582,419 1,758,597 11,050 0
OAKWOOD VILLAGE FL 748,356 314,278 103,045 566,398 26,493 0
PELICAN POINTE I FL 1,337,084 1,337,084 221,311 1,204,527 33,502 0
PELICAN POINTE II FL 1,023,399 1,023,399 158,390 1,190,595 36,446 0
PINE BARRENS FL 1,538,535 1,538,535 302,399 1,405,048 76,590 0
RIVERS END II FL 1,161,409 1,161,409 160,894 936,779 20,100 0
SKY PINES II FL 909,906 909,906 266,498 676,283 76,635 0
SUNSET WAY I FL 1,665,024 1,665,024 621,326 1,353,585 27,225 0
SUNSET WAY II FL 2,694,057 2,131,279 649,409 1,678,049 24,364 0
THYMEWOOD II FL 1,692,441 836,509 429,480 731,592 16,512 0
WHISPERING PINES II FL 627,822 627,822 71,433 505,435 8,800 0
WINDWOOD I FL 599,612 599,612 24,569 457,382 52,283 0
COLONY WOODS II GA 1,581,032 1,581,032 273,901 1,556,452 4,509 0
GLEN ARM MANOR GA 1,200,000 1,200,000 148,679 1,274,345 68,736 0
GLENWOOD VILLAGE GA 1,518,815 887,795 156,445 1,000,148 8,820 0
HATCHERWAY GA 965,525 965,525 111,336 1,102,856 29,093 0
INDIAN LAKE I & II GA 4,557,695 4,557,695 898,265 5,262,660 33,694 0
KINGS COLONY GA 2,098,525 1,506,804 237,393 1,723,165 17,690 0
LAKESHORE I GA 1,256,570 1,256,570 45,846 995,214 36,755 0
LAUREL GLEN GA 1,730,108 1,730,108 265,974 1,627,699 50,551 0
MARSHLANDING II GA 972,993 925,655 28,851 918,445 14,918 0
MILL RUN GA 1,274,864 1,274,864 187,772 1,260,209 70,545 0
</TABLE>
F-35
<PAGE> 96
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
SCHEDULE III
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
- ----------------------------------------------------------------------------------------------------------------------------
COLUMN A | COLUMN B | COLUMN C | COLUMN D
- ----------------------------------------------------------------------------------------------------------------------------
DESCRIPTION - | | | COSTS CAPITALIZED
(ALL GARDEN APARTMENTS) | ENCUMBRANCES | INITIAL COST TO THE COMPANY | SUBSEQUENT TO ACQUISITION
- ----------------------------------------------------------------------------------------------------------------------------
| | |
| AT | |
| AT STATED | BUILDINGS |
| CONTRACTUAL CARRYING | & | CARRYING
PROPERTY NAME ST | VALUE VALUE | LAND IMPROVEMENTS | IMPROVEMENTS COSTS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
RAMBLEWOOD II GA 1,870,245 1,870,245 264,381 1,906,078 12,359 0
STEWART WAY I GA 1,387,052 1,387,052 260,869 1,614,962 66,645 0
STEWART WAY II GA 1,244,267 1,244,267 215,612 1,468,190 41,638 0
VALLEYBROOK GA 1,568,241 1,568,241 129,440 1,353,762 38,062 0
WILLCREST WOODS GA 1,060,687 1,060,687 245,513 1,189,165 69,577 0
BRADFORD PLACE IL 1,173,564 883,185 215,924 719,156 9,994 0
BRUNSWICK APTS IL 1,432,000 1,432,000 53,500 1,644,920 16,323 0
HUNTER GLEN IL 1,022,337 1,022,337 256,720 1,461,719 8,529 0
CADIA COURT II IN 1,862,018 1,862,018 398,032 1,668,862 19,968 0
APPLEGATE APTS II IN 1,256,575 1,256,575 163,470 1,815,278 20,993 0
ARAGON WOODS IN 1,136,613 1,136,613 298,431 1,248,762 12,454 0
CAMBRIDGE COMMONS III IN 0 0 1,087 1,306,118 23,322 0
CHERRY GLEN I IN 1,369,733 1,369,733 203,862 1,465,002 15,084 0
CHERRY GLENN II IN 1,115,664 1,115,664 4,343 1,731,393 17,319 0
DOGWOOD GLEN I IN 1,779,466 1,779,466 248,246 1,427,201 36,170 0
ELMTREE PARK I IN 1,200,137 1,200,137 208,426 1,308,102 9,396 0
ELMTREE PARK II IN 1,040,873 1,040,873 45,751 1,107,766 9,531 0
MARABOU MILLS II IN 1,009,103 1,009,103 84,391 1,190,609 10,654 0
MARABOU MILLS III IN 1,196,481 1,196,481 75,122 1,099,183 30,972 0
MARIBOU MILLS IN 1,451,240 1,451,240 179,704 1,570,450 17,585 0
MEADOWOOD II IN 744,494 744,494 61,771 1,193,299 18,315 0
RIDGEWOOD IN 1,207,481 1,207,481 100,300 1,320,200 8,200 0
RIDGEWOOD II & III IN 1,364,345 1,364,345 100,795 1,564,956 11,831 0
ROSEWOOD COMMONS II IN 1,280,756 1,280,756 121,194 1,172,776 26,240 0
SHERBROOK IN 1,202,138 1,202,138 141,991 1,254,354 32,218 0
SPICEWOOD APT IN 1,029,011 1,029,011 90,619 1,025,442 28,571 0
WILLOWOOD II IN 1,148,500 1,148,500 149,671 1,310,162 64,383 0
CEDARGATE II KY 1,160,000 1,160,000 123,475 966,198 26,454 0
CEDARWOOD II KY 1,012,738 1,012,738 173,648 913,048 31,399 0
CEDARWOOD III KY 877,391 877,391 122,917 966,624 31,238 0
HAYFIELD PARK KY 1,603,515 1,603,515 341,799 1,680,717 52,787 0
SPRINGWOOD KY 827,693 827,693 85,723 844,029 34,466 0
CHERRY TREE APT MD 2,154,213 2,154,213 623,153 2,711,201 44,484 0
FORSYTHIA COURT II MD 2,385,060 1,786,419 283,697 1,597,543 14,337 0
MERRIFIELD MD 2,102,577 2,102,577 210,294 2,271,824 23,169 0
GARDEN COURT MI 2,173,656 2,173,656 127,573 2,247,404 18,534 0
HEATHMOORE I MI 1,590,427 1,590,427 128,605 1,329,672 25,865 0
LAUREL BAY MI 903,500 903,500 164,159 1,160,480 8,953 0
NEWBERRY II MI 1,295,979 733,305 91,315 715,532 5,843 0
</TABLE>
F-36
<PAGE> 97
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
SCHEDULE III
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
- ----------------------------------------------------------------------------------------------------------------------------
COLUMN A | COLUMN B | COLUMN C | COLUMN D
- ----------------------------------------------------------------------------------------------------------------------------
DESCRIPTION - | | | COSTS CAPITALIZED
(ALL GARDEN APARTMENTS) | ENCUMBRANCES | INITIAL COST TO THE COMPANY | SUBSEQUENT TO ACQUISITION
- ----------------------------------------------------------------------------------------------------------------------------
| | |
| AT | |
| AT STATED | BUILDINGS |
| CONTRACTUAL CARRYING | & | CARRYING
PROPERTY NAME ST | VALUE VALUE | LAND IMPROVEMENTS | IMPROVEMENTS COSTS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AMBERWOOD OH 902,458 902,458 171,878 1,003,228 10,388 0
AMESBURY I OH 1,248,882 1,248,882 136,179 1,133,012 25,711 0
AMESBURY II OH 1,314,616 1,314,616 168,000 1,621,000 29,660 0
ANNHURST II OH 1,106,590 1,182,406 123,397 1,006,847 43,349 0
ANNHURST III OH 935,760 935,760 70,246 1,003,822 50,596 0
APPLERIDGE I OH 1,053,897 1,053,897 214,233 912,594 32,571 0
ASHFORD HILLS OH 1,400,000 1,400,000 359,522 1,260,948 50,205 0
CLEARWATER APTS OH 1,053,902 1,053,902 132,478 1,045,131 33,881 0
DARTMOUTH PLACE II OH 878,578 878,578 114,393 1,135,027 18,752 0
FOXHAVEN OH 1,871,766 1,871,766 403,075 1,657,128 25,040 0
HARVEST GROVE I OH 1,375,970 1,375,970 225,001 1,276,072 4,741 0
HARVEST GROVE II OH 1,110,103 1,110,103 251,000 1,201,600 16,167 0
LINDENDALE APTS OH 1,422,218 1,422,218 188,724 1,717,434 27,436 0
MEADOWOOD OH 472,439 472,439 50,520 573,536 9,593 0
MONTROSE SQUARE OH 1,778,276 1,778,276 568,914 2,184,937 25,587 0
PICKERINGTON MEADOWS OH 1,177,725 1,177,725 150,000 1,200,000 12,719 0
RED DEER II OH 1,234,575 1,234,575 235,173 1,474,820 10,825 0
RIVER GLEN I OH 1,069,821 1,069,821 146,287 1,287,027 10,341 0
RIVER GLEN II OH 1,175,707 1,175,707 178,568 1,230,268 3,935 0
RIVERVIEW ESTATES OH 1,374,578 1,374,578 74,073 1,609,026 60,626 0
SUFFOLK GROVE II OH 1,082,115 1,082,115 154,263 1,248,211 14,648 0
THE WILLOWS I OH 589,511 589,511 157,611 761,576 28,428 0
THE WILLOWS III OH 877,710 877,710 44,602 871,216 11,338 0
WILLOWOOD II OH 944,544 944,544 35,657 622,170 9,183 0
WINTHROP COURT II OH 754,613 754,613 145,906 825,115 17,310 0
SHERBROOK PA 1,361,339 1,361,339 355,188 1,492,285 21,350 0
WOODLANDS II PA 1,168,417 1,168,417 118,447 1,346,599 20,173 0
RAVENWOOD SC 1,672,542 1,672,542 169,601 1,507,589 7,532 0
SPRINGBROOK SC 1,730,569 1,730,569 120,467 1,762,353 51,993 0
WILLOW LAKE SC 2,084,584 2,084,584 188,704 1,738,232 8,820 0
CEDARHILL TN 1,476,915 1,476,915 235,269 1,331,238 43,030 0
WALKER PLACE TX 1,183,000 1,183,000 269,890 1,196,059 0 0
BRUNSWICK II WV 1,324,332 1,324,332 104,000 1,696,000 18,094 0
---------------------------------------------------------- -------------------------------
TOTALS $150,284,725 $142,636,874 $23,124,313 $143,768,544 $3,064,622 $0
========================================================== ===============================
</TABLE>
F-37
<PAGE> 98
SCHEDULE III
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COLUMN A | COLUMN E | COLUMN F | COLUMN G |COLUMN H | COLUMN I
- -----------------------------------------------------------------------------------------------------------------------------------
| | | | |
| | | | |
| GROSS AMOUNT AT WHICH CARRIED AT | | | |
DESCRIPTION - | CLOSE OF PERIOD, DECEMBER 31, 1997 | | | |
(ALL GARDEN APARTMENTS) | NOTES (1) AND (2) | | | | LIFE ON
- -------------------------------|----------------------------------------| | DATE | | WHICH
| | BUILDINGS & | | ACCUMULATED | OF | DATE | DEPRECIATION
PROPERTY NAME ST | LAND | IMPROVEMENTS | TOTAL | DEPRECIATION | CONSTRUCTION| ACQUIRED| IS COMPUTED
- -------------------------------|--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GLENVIEW AL 178,221 1,608,261 1,786,482 105,648 8/1/86 N/A 31
BEL AIRE II FL 81,451 402,530 483,981 27,238 1/1/86 N/A 30
BLUEBERRY HILL FL 63,610 400,114 463,724 25,320 12/1/86 N/A 31
CALIFORNIA GARDENS FL 96,067 407,896 503,963 26,405 7/1/87 N/A 32
CANTERBURY CROSSING FL 78,303 555,560 633,863 40,298 12/1/83 N/A 28
CENTRE LAKE I, II & III FL 1,210,779 3,171,034 4,381,813 212,759 6/1/86 N/A 30
FOREST GLEN FL 229,086 932,862 1,161,948 63,594 1/1/86 N/A 30
GARDEN TERRACE I FL 89,123 898,117 987,240 72,068 9/1/81 N/A 26
HERON POINTE FL 367,599 1,459,693 1,827,292 99,632 1/1/86 N/A 30
HIDDEN ACRES FL 388,349 467,556 855,905 31,473 1/1/87 N/A 31
HILLSIDE TRACE FL 197,277 837,712 1,034,989 53,029 9/1/87 N/A 32
HOLLY SANDS II FL 231,970 1,001,290 1,233,260 73,551 6/1/86 N/A 30
JEFFERSON WAY FL 116,366 1,069,855 1,186,221 67,887 8/1/87 N/A 32
JUPITER COVE I FL 219,698 887,389 1,107,087 56,580 9/1/87 N/A 32
JUPITER COVE III FL 285,929 1,033,274 1,319,203 65,626 9/1/87 N/A 32
MARK LANDING I FL 250,827 1,537,499 1,788,326 107,681 11/1/87 N/A 32
MIGUEL PLACE FL 237,234 1,098,108 1,335,342 69,936 10/1/87 N/A 32
OAK GARDENS FL 582,419 1,260,153 1,842,572 79,905 1/1/88 N/A 32
OAKWOOD VILLAGE FL 103,045 236,593 339,638 16,522 1/1/86 N/A 30
PELICAN POINTE I FL 221,311 1,236,173 1,457,484 78,872 11/1/87 N/A 32
PELICAN POINTE II FL 158,390 1,148,174 1,306,564 73,232 11/1/87 N/A 32
PINE BARRENS FL 302,399 1,479,473 1,781,872 101,261 6/1/86 N/A 30
RIVERS END II FL 160,894 928,416 1,089,310 62,320 1/1/86 N/A 30
SKY PINES II FL 266,498 751,876 1,018,374 58,412 6/1/86 N/A 30
SUNSET WAY I FL 621,326 1,378,724 2,000,050 88,703 8/1/87 N/A 32
SUNSET WAY II FL 649,409 1,499,675 2,149,084 93,991 4/27/88 N/A 32
THYMEWOOD II FL 429,480 379,444 808,924 26,709 1/1/86 N/A 30
WHISPERING PINES II FL 71,433 513,456 584,889 34,589 3/31/86 N/A 30
WINDWOOD I FL 24,569 508,960 533,529 32,352 5/1/88 N/A 32
COLONY WOODS II GA 273,901 1,506,624 1,780,525 93,704 3/28/88 N/A 32
GLEN ARM MANOR GA 148,679 1,207,004 1,355,683 93,390 1/1/86 N/A 30
GLENWOOD VILLAGE GA 156,445 665,292 821,737 43,496 12/1/86 N/A 31
HATCHERWAY GA 111,336 1,099,966 1,211,302 76,588 1/1/86 N/A 30
INDIAN LAKE I & II GA 898,265 4,907,355 5,805,620 312,759 8/11/87 N/A 32
KINGS COLONY GA 237,393 1,244,186 1,481,579 78,687 11/15/87 N/A 32
LAKESHORE I GA 45,846 930,784 976,630 62,944 6/20/86 N/A 31
LAUREL GLEN GA 265,974 1,675,742 1,941,716 111,052 4/4/86 N/A 30
MARSHLANDING II GA 28,851 894,596 923,447 58,396 12/31/86 N/A 31
MILL RUN GA 187,772 1,328,812 1,516,584 93,353 4/14/86 N/A 30
</TABLE>
F-38
<PAGE> 99
<TABLE>
<CAPTION>
SCHEDULE III
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
COLUMN A | COLUMN E | COLUMN F | COLUMN G | COLUMN H | COLUMN I
- -----------------------------------------------------------------------------------------------------------------------------------
| | | | |
| | | | |
| GROSS AMOUNT AT WHICH CARRIED AT | | | |
DESCRIPTION - | CLOSE OF PERIOD, DECEMBER 31, 1997 | | | |
(ALL GARDEN APARTMENTS) | NOTES (1) AND (2) | | | | LIFE ON
- --------------------------------|----------------------------------------| | DATE | | WHICH
| | BUILDINGS & | | ACCUMULATED | OF | DATE | DEPRECIATION
PROPERTY NAME ST | LAND | IMPROVEMENTS | TOTAL | DEPRECIATION | CONSTRUCTION| ACQUIRED| IS COMPUTED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RAMBLEWOOD II GA 264,381 1,775,754 2,040,135 115,118 10/1/86 N/A 31
STEWART WAY I GA 260,869 1,667,283 1,928,152 123,098 1/1/86 N/A 30
STEWART WAY II GA 215,612 1,507,566 1,723,178 103,151 12/1/86 N/A 31
VALLEYBROOK GA 129,440 1,389,738 1,519,178 94,215 10/15/86 N/A 31
WILLCREST WOODS GA 245,513 1,225,269 1,470,782 90,474 12/31/86 N/A 31
BRADFORD PLACE IL 215,924 625,791 841,715 41,522 7/23/86 N/A 31
BRUNSWICK APTS IL 53,500 1,623,865 1,677,365 108,240 4/1/86 N/A 30
HUNTER GLEN IL 256,720 1,322,878 1,579,598 85,599 3/1/87 N/A 31
ACADIA COURT II IN 398,032 1,620,669 2,018,701 107,109 6/6/86 N/A 30
APPLEGATE APTS II IN 163,470 1,833,474 1,996,944 119,714 6/1/87 N/A 31
ARAGON WOODS IN 298,431 1,183,847 1,482,278 76,700 12/26/86 N/A 31
CAMBRIDGE COMMONS III IN 1,087 1,195,015 1,196,102 73,622 1/29/88 N/A 32
CHERRY GLEN I IN 203,862 1,465,277 1,669,139 96,609 7/10/86 N/A 31
CHERRY GLENN II IN 4,343 1,698,391 1,702,734 109,846 4/1/87 N/A 31
DOGWOOD GLEN I IN 248,246 1,320,813 1,569,059 85,730 7/18/86 N/A 31
ELMTREE PARK I IN 208,426 1,181,214 1,389,640 77,970 6/8/86 N/A 30
ELMTREE PARK II IN 45,751 1,115,030 1,160,781 71,553 5/1/87 N/A 31
MARABOU MILLS II IN 84,391 1,153,343 1,237,734 71,073 N/A 10/29/93 33
MARABOU MILLS III IN 75,122 1,128,403 1,203,525 71,606 12/1/87 N/A 32
MARIBOU MILLS IN 179,704 1,585,615 1,765,319 108,653 6/23/86 N/A 31
MEADOWOOD II IN 61,771 1,058,489 1,120,260 71,408 5/30/86 N/A 30
RIDGEWOOD IN 100,300 1,328,399 1,428,699 63,215 N/A 8/1/96 30
RIDGEWOOD II & III IN 100,795 1,427,169 1,527,964 96,160 3/1/86 N/A 30
ROSEWOOD COMMONS II IN 121,194 1,197,210 1,318,404 77,135 6/1/87 N/A 31
SHERBROOK IN 141,991 1,233,871 1,375,862 81,970 6/16/86 N/A 31
SPICEWOOD APT IN 90,619 1,009,511 1,100,130 68,058 3/16/86 N/A 30
WILLOWOOD II IN 149,671 1,264,887 1,414,558 80,911 6/1/87 N/A 31
CEDARGATE II KY 123,475 893,838 1,017,313 59,175 6/1/86 N/A 30
CEDARWOOD II KY 173,648 913,492 1,087,140 61,848 1/1/86 N/A 30
CEDARWOOD III KY 122,917 996,373 1,119,290 70,068 5/20/86 N/A 30
HAYFIELD PARK KY 341,799 1,558,181 1,899,980 103,526 7/17/86 N/A 31
SPRINGWOOD KY 85,723 877,194 962,917 60,728 1/1/86 N/A 30
CHERRY TREE APT MD 623,153 2,470,168 3,093,321 161,679 9/1/86 N/A 31
FORSYTHIA COURT II MD 283,697 1,484,064 1,767,761 94,891 6/1/87 N/A 31
MERRIFIELD MD 210,294 2,219,004 2,429,298 139,664 1/11/88 N/A 32
GARDEN COURT MI 127,573 2,177,868 2,305,441 137,211 4/22/88 N/A 32
HEATHMOORE I MI 128,605 1,216,286 1,344,891 80,094 7/31/86 N/A 31
LAUREL BAY MI 164,159 1,079,514 1,243,673 76,263 10/1/89 N/A 34
NEWBERRY II MI 91,315 631,930 723,245 41,777 12/26/86 N/A 31
</TABLE>
F-39
<PAGE> 100
<TABLE>
<CAPTION>
SCHEDULE III
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
COLUMN A | COLUMN E | COLUMN F | COLUMN G |COLUMN H | COLUMN I
- -----------------------------------------------------------------------------------------------------------------------------------
| | | | |
| | | | |
| GROSS AMOUNT AT WHICH CARRIED AT | | | |
DESCRIPTION - | CLOSE OF PERIOD, DECEMBER 31, 1997 | | | |
(ALL GARDEN APARTMENTS) | NOTES (1) AND (2) | | | | LIFE ON
- -------------------------------|----------------------------------------| | DATE | | WHICH
| | BUILDINGS & | | ACCUMULATED | OF | DATE | DEPRECIATION
PROPERTY NAME ST | LAND | IMPROVEMENTS | TOTAL | DEPRECIATION | CONSTRUCTION| ACQUIRED| IS COMPUTED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AMBERWOOD OH 171,878 1,012,070 1,183,948 64,544 10/1/87 N/A 32
AMESBURY I OH 136,179 1,043,969 1,180,148 72,912 2/17/86 N/A 30
AMESBURY II OH 168,000 1,648,162 1,816,162 112,361 N/A 09/26/95 30
ANNHURST II OH 123,397 1,171,504 1,294,901 75,772 7/1/86 N/A 31
ANNHURST III OH 70,246 1,028,853 1,099,099 62,381 5/5/88 N/A 32
APPLERIDGE I OH 214,233 742,825 957,058 52,819 1/1/87 N/A 28
ASHFORD HILLS OH 359,522 975,907 1,335,429 65,009 6/23/86 N/A 31
CLEARWATER APTS OH 132,478 986,621 1,119,099 68,625 11/1/86 N/A 31
DARTMOUTH PLACE II OH 114,393 1,097,803 1,212,196 73,083 7/18/86 N/A 31
FOXHAVEN OH 403,075 1,588,159 1,991,234 106,636 8/18/86 N/A 31
HARVEST GROVE I OH 225,001 1,162,235 1,387,236 76,172 9/8/86 N/A 31
HARVEST GROVE II OH 251,000 1,215,915 1,466,915 81,044 N/A 09/26/95 30
LINDENDALE APTS OH 188,724 1,660,305 1,849,029 107,245 3/1/87 N/A 31
MEADOWOOD OH 50,520 582,245 632,765 39,060 1/1/86 N/A 30
MONTROSE SQUARE OH 568,914 2,185,903 2,754,817 146,705 1/1/87 N/A 30
PICKERINGTON MEADOWS OH 150,000 1,210,870 1,360,870 79,996 N/A 03/29/95 30
RED DEER II OH 235,173 1,391,719 1,626,892 89,220 8/1/87 N/A 32
RIVER GLEN I OH 146,287 1,255,066 1,401,353 81,434 4/1/87 N/A 31
RIVER GLEN II OH 178,568 1,200,194 1,378,762 75,784 11/1/87 N/A 32
RIVERVIEW ESTATES OH 74,073 1,667,173 1,741,246 122,226 1/1/87 N/A 28
SUFFOLK GROVE II OH 154,263 1,203,575 1,357,838 77,257 6/1/87 N/A 31
THE WILLOWS I OH 157,611 768,235 925,846 59,083 1/1/87 N/A 28
THE WILLOWS III OH 44,602 845,236 889,838 55,820 7/1/87 N/A 32
WILLOWOOD II OH 35,657 605,790 641,447 39,875 8/1/86 N/A 31
WINTHROP COURT II OH 145,906 840,546 986,452 56,194 2/25/86 N/A 30
SHERBROOK PA 355,188 1,448,955 1,804,143 94,750 12/20/86 N/A 31
WOODLANDS II PA 118,447 1,302,332 1,420,779 84,609 3/1/87 N/A 31
RAVENWOOD SC 169,601 1,512,798 1,682,399 96,793 5/7/87 N/A 31
SPRINGBROOK SC 120,467 1,744,503 1,864,970 123,541 6/13/86 N/A 30
WILLOW LAKE SC 188,704 1,763,237 1,951,941 114,007 12/12/86 N/A 31
CEDARHILL TN 235,269 1,268,996 1,504,265 82,286 5/30/86 N/A 30
WALKER PLACE TX 269,890 1,194,215 1,464,105 74,399 1/25/88 N/A 32
BRUNSWICK II WV 104,000 1,712,076 1,816,076 112,799 N/A 09/26/95 30
-------------------------------------------------------
TOTALS $23,124,313 $138,244,903 $161,369,216 $9,151,786
=======================================================
</TABLE>
F-40
<PAGE> 101
<TABLE>
<CAPTION>
LEXFORD RESIDENTIAL TRUST
(Formerly Lexford, Inc. and Cardinal Realty Services, Inc.)
NOTES TO SCHEDULE III
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Note (1) Schedule III Reconciliation: 1997 1996 1995
------------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Balance as of beginning of year $ 161,569,924 $ 164,334,055 $ 166,430,698 (4)
Additions during the year:
Acquisitions of Property 0 1,420,501 6,391,600
Costs Capitalized 2,355,122 702,056 0
Deductions during the year:
Disposals through foreclosure 0 (4,886,688) (3,380,382)
Disposals through sales (2,555,830) 0 0
Other (4) 0 0 (937,482)
Application of Income from the Effective
Date through December 31, 1995 upon full
consolidation from "Held for Sale"
classification 0 0 (4,170,379)
------------------- ------------------ -----------------
Balance at close of year: 161,369,216 161,569,924 164,334,055
------------------- ------------------ -----------------
Other:
Furniture and Fixtures 0 0 3,368,617
Application of Income from the Effective
Date through December 31, 1995 upon full
consolidation from "Held for Sale"
classification 0 0 (3,368,617)
------------------- ------------------ -----------------
Balance, Rental Properties $ 161,369,216 $ 161,569,924 $ 164,334,055
December 31, 1997, 1996, 1995, respectively =================== ================== =================
<FN>
Note (2) Tax basis of assets:
The tax basis for federal income tax purposes in Rental Properties
was approximately $106,963,000 at December 31, 1997.
Note (3) Depreciation:
No depreciation has been provided for the period September 11,
1992 (Effective Date) to December 31, 1995 as the assets were held
for sale (SEE NOTES 1 AND 2 TO CONSOLIDATED FINANCIAL STATEMENTS).
Note (4) Correction of interest recorded in prior years; such interest
was capitalized during the period the Rental Properties were
classified as Held for Sale and therefore has no impact on equity.
</FN>
</TABLE>
F-41
<PAGE> 1
EXHIBIT 3.4
CERTIFICATE OF AMENDMENT
TO RESTATED ARTICLES OF INCORPORATION OF
CARDINAL REALTY SERVICES, INC.
Mark D. Thompson, Executive Vice President, and Bradley A. Van Auken,
Secretary of Cardinal Realty Services, Inc., an Ohio corporation (the
"Company"), do hereby certify that, on October 7, 1997 at the Company's Annual
Meeting of Shareholders, a majority of the issued and outstanding shares of the
Company's common stock, without par value, were voted in favor of the adoption
of the following amendment to the Restated Articles of Incorporation of the
Company:
RESOLVED, that Article FIRST of the Restated Articles of Incorporation of
the Company be amended in its entirety to read as follows:
FIRST: The name of said corporation shall be Lexford, Inc. (the
"Corporation").
IN WITNESS WHEREOF, the above-named officers, acting for and on behalf of
the Corporation, have hereunto set their hands this 7th day of October, 1997.
/s/ Mark D. Thompson
-------------------------------------------
Mark D. Thompson, Executive Vice President
/s/ Bradley A. Van Auken
--------------------------------------
Bradley A. Van Auken, Secretary
<PAGE> 1
Exhibit 3.7
LEXFORD RESIDENTIAL TRUST
ARTICLES OF AMENDMENT
Lexford Residential Trust, a Maryland real estate investment trust (the
"Trust"), hereby certifies to the State Department of Assessments and Taxation
of Maryland that:
FIRST: The Declaration of Trust of the Trust is hereby amended by
striking out the definitions of "Constructive Ownership Limit" and "Ownership
Limit" set forth in Section 6.1(A) thereof and inserting in lieu thereof the
following:
"Constructive Ownership Limit" shall mean 9.2% of the outstanding Common
Equity Shares or 9.8% of the outstanding Equity Shares of any class of Preferred
Shares.
"Ownership Limit," with respect to the Common Shares, shall mean 9.2% of
the outstanding Common Equity Shares of the Trust; provided, however, if there
is more than one Existing Holder on the Adoption Date, the Ownership Limit shall
be the lower of (i) the foregoing percentage and (ii) the highest percentage
(divided by five minus the number of the then-Existing Holders) of Common Equity
Shares that could be Beneficially Owned by Persons other than Existing Holders
without creating the possibility that five Beneficial Owners of Common Shares
(including all of the then-Existing Holders) could Beneficially Own in the
aggregate, more than 49.9% of the outstanding Common Equity Shares (taking into
account any potential forfeitures of Common Shares), and, with respect to any
class or series of Preferred Shares, shall mean 9.8% of the outstanding
Preferred Equity Shares of such class or series.
SECOND: The amendment to the Declaration of Trust of the Trust as
hereinabove set forth has been duly resolved and adopted by the unanimous vote
of the board of trustees of the Trust pursuant to the authority conferred upon
the board of trustees by Sections 6.1(J) and 8.2 of the Declaration of Trust of
the Trust as well as Section 8-501 of the Corporations and Associations Article
of the Annotated Code of Maryland.
IN WITNESS WHEREOF: Lexford Residential Trust has caused these Articles
of Amendment to be signed in its name and on its behalf by its Executive Vice
President and attested by its Secretary on March 14, 1998.
<PAGE> 2
THE UNDERSIGNED, Executive Vice President of Lexford Residential Trust,
who executed on behalf of said Trust the foregoing Articles of Amendment of
which this certificate is made a part, hereby acknowledges, in the name and on
behalf of said Trust, the foregoing Articles of Amendment to be the act of said
Trust and further certifies that, to the best of his knowledge, information, and
belief, the matters and facts set forth therein with respect to the approval
thereof are true in all material respects, under the penalties of perjury.
ATTEST: LEXFORD RESIDENTIAL TRUST:
/s/ Bradley A. Van Auken /s/ Mark D. Thompson
- ------------------------ -------------------------------------
Bradley A. Van Auken Mark D. Thompson
Senior Vice President, Executive Vice President
General Counsel & Secretary
2
<PAGE> 1
<TABLE>
<CAPTION>
<S> <C> <C>
COMMON SHARES COMMON SHARES
[Lexford Residential Trust Logo]
NUMBER LEXFORD RESIDENTIAL TRUST SHARES
FTB______ _______
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
THIS CERTIFICATE IS TRANSFERABLE IN SEE REVERSE FOR
CINCINNATI, OHIO AND NEW YORK, NEW YORK CERTAIN DEFINITIONS
CUSIP 528933 10 4
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF BENEFICIAL INTEREST, WITHOUT PAR VALUE, OF
--------------------------------------------------- --------------------------------------------------
- ------------------------------------------------------LEXFORD RESIDENTIAL TRUST-----------------------------------------------------
--------------------------------------------------- --------------------------------------------------
CERTIFICATE OF STOCK
transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of this certificate properly
endorsed.
This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the
Declaration of Trust of the Trust as amended, filed in the office of the Secretary of State of Maryland, to all of which the holder,
by acceptance hereof assents. This certificate is not valid unless countersigned by the Transfer Agent and registered by the
Registrar.
WITNESS the seal of the Corporation and the signatures of its duly authorized officers.
Dated:
Bradley A. Van Auken LEXFORD RESIDENTIAL TRUST John B. Bartling, Jr.
Secretary CORPORATE SEAL President
MARYLAND
[The lower right hand side of the certificate has the following information vertically typed on the certificate:
COUNTERSIGNED AND REGISTERED:
FIFTH THIRD BANK
(Cincinnati, Ohio)
TRANSFER AGENT
BY AND REGISTRAR
AUTHORIZED SIGNATURE]
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
<S> <C> <C>
LEXFORD RESIDENTIAL TRUST
THE CORPORATION WILL MAIL TO THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE WITHIN FIVE DAYS AFTER RECEIPT OF WRITTEN
REQUEST THEREFOR, A COPY OF THE EXPRESS TERMS OF THE SHARES REPRESENTED BY THIS CERTIFICATE AND OF OTHER CLASSES AND SERIES OF
SHARES WHICH THE CORPORATION IS AUTHORIZED TO ISSUE.
-----------------------------
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or regulations:
TEN COM -as tenants in common UNIF GIFT MIN ACT-_____________ Custodian_______________
TEN ENT -as tenants by the entireties (Cust) (Minor)
JT TEN -as joint tenants with right
of survivorship and not as Under Uniform Gifts to Minors
tenants in common Act __________________________
(State)
UNIT TRF MIN ACT-______________ Custodian (until age___)
(Cust) (Minor)
____________ under Uniform Transfers
(Minor)
to Minors
Act __________________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value received, _________________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
- ------------------------------------------------------------------------------------------------------------------------------------
______________________________________________________________________________________________________________________________Shares
of the capital stock represented by the within Certificate and do hereby irrevocably constitute and appoint
____________________________________________________________________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises.
Dated, ________________________ X _________________________________________________________________________________________________
X _________________________________________________________________________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON
THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.
SIGNATURE(S) GUARANTEED:
BY
- -----------------------------------------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITU-
TION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT
UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM) PURSUANT TO S.E.C. RULE 17Ad-15.
The Trust will furnish to any holder of its Shares on request and without charge a full statement of the designations and nay
preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends or distributions, qualifications,
and terms and conditions of redemption of the Shares of each class or series which the Trust is authorized to issue: the differences
in the relative rights and preferences between the Shares of each class or series to the extent they have been set; and the
authority of the Board of Trustees to set the relative rights and preferences of subsequent classes or series.
The common shares represented by this certificate are subject to restrictions on ownership and transfer for the purpose of the
Trust's maintenance of its status as a real estate investment trust under the Internal Revenue Code of 1986, as amended. Transfers
in contravention of such restrictions may be void ab initio. Subject to certain additional restrictions, no Person may Beneficially
Own Common Shares in excess of 8.1% (or such other percentage as may be determined by the Board of Trustees) of the outstanding
Common Equity Shares of the Trust (unless such Person is an Existing Holder) and no Person may Consecutively Own Common shares in
excess of 8.1% (or such other percentage as may be determined by the Board of Trustees) of the outstanding Common Equity shares of
the Trust (unless such person is an Existing Constructive Holder). Any person who attempts to Beneficially Own or Constructively Own
Shares in excess of the above limitations must immediately notify the Trust. All capitalized terms used in this legend have the
meanings set forth in the Declaration of Trust, a copy of which, including the restrictions on ownership and transfer, will be sent,
without charge to each Shareholder who so requests. If the restrictions on ownership and transfer are violated, the Common shares
represented hereby will be transferred automatically and by operation of law to a Special Trust and shall be designated Excess
Common Shares.
</TABLE>
<PAGE> 1
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") made and entered into this 1st
day of ______, 199_, by and between __________________________, a(n) ___________
limited partnership ("Owner"), and LEXFORD PROPERTIES, INC. ("Manager") relating
to an apartment complex of similar name (the "Property").
W I T N E S S E T H:
--------------------
Owner desires to employ Manager in the management and operation of the
Property by turning over to Manager all control and discretion in the operation,
direction, management and supervision of the Property, and Manager desires to
assume such control and discretion upon the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants herein contained, Owner and Manager agree as follows:
ARTICLE I
DEFINITIONS
-----------
The following terms shall have the following meanings when used in this
Agreement:
1.01. BUDGET. A composite of (i) an Operations Budget, which shall be an
estimate of revenues and expenditures for the operation of the Property during a
Fiscal Year, including a schedule of expected apartment rentals (excluding
security deposits) for the period in question and a schedule of expected special
repairs and maintenance projects, and (ii) a Capital Budget, which shall be an
estimate of capital replacements, substitutions of, and additions to, the
Property for a Fiscal Year.
1.02. DEPOSITORY. A national or state bank qualified to engage in the
banking or trust business designated by Manager and approved by Owner.
1.03. FEE. The MANAGEMENT FEE payable each month by Owner to Manager
hereunder shall be an amount equal to five percent (5%) of the Gross Receipts of
the Property; or a minimum sum of $N/A per month, effective N/A, whichever is
greater. The BOOKKEEPING FEE for general bookkeeping, recording of receipts and
disbursements, check writing and bank account reconciliations, preparation of
monthly statements of cash receipts and disbursements and other required
bookkeeping functions shall be Three Hundred Fifty Dollars ($350.00) per month.
Manager may, at its option, from time to time (but not more often than annually)
adjust the Bookkeeping Fee in order to reflect any increase in the cost of
living index from the date of this agreement through the date of such
adjustment. Any such adjustment shall be effective on a prospective basis, only.
The PERFORMANCE FEE shall be Two Dollars ($2.00) per apartment for each month in
which the Manager collects not less than ninety-six percent (96%) of the
potential gross revenue by the end of such month. Model apartments, the on-site
office and the discounted value of Property Employees apartments, shall be
considered included in the collected gross revenue at their current market value
for purposes of determining the percentage collected. The Owner agrees that the
above payments due to Manager can and shall be deducted from collected rental
receipts.
1.04. FISCAL YEAR. The year beginning January 1st and ending December 31st,
which is the fiscal year established by Owner for the Property.
1.05. GROSS RECEIPTS. The entire amount of all receipts, determined on a
cash basis, from tenant rentals collected pursuant to tenant leases for each
month during the term hereof, provided, however, that there shall be excluded
from tenant rentals any tenant security deposits received from tenants.
<PAGE> 2
1.06. PROPERTY EMPLOYEES. Those persons employed by Manager, and/or by an
affiliate of Manager, as a management staff (i.e. Manager, Assistant Managers,
Leasing Agents, Maintenance Personnel, and other personnel necessary to be
employed in order to maintain and operate the property).
1.07. TERM. The term of this Agreement shall commence on the date hereof
and shall, subject to the provisions hereof, expire five (5) years from the date
hereof (the "Original Term"); provided, however, that Owner may terminate this
Agreement at any time pursuant to Section 7.05. Such term shall automatically be
extended for additional terms of one (1) year commencing on the expiration of
the Original Term (each additional term hereinafter referred to as an
"Additional Term"), subject to Section 7.05, unless Owner has given notice to
Manager thirty (30) days prior to such commencement thereof that there shall be
no Additional Term.
ARTICLE II
DUTIES AND RIGHTS OF MANAGER
----------------------------
2.01. APPOINTMENT OF MANAGER. During the term of this Agreement, Manager
agrees, for and in consideration of the compensation hereinafter provided, and
Owner hereby grants to Manager the sole and exclusive right, to supervise and
direct the management and operation of the Property. Everything performed by
Manager under this Agreement shall be done as agent of Owner.
2.02. GENERAL OPERATION. Manager shall operate the Property in the same
manner as is customary and usual in the operation of comparable facilities, and
shall provide such services as are customarily provided by operators of
apartment properties of comparable class and standing consistent with the
Property's facilities. In addition to the other obligations of Manager set forth
herein, Manager shall render the following services and perform the following
duties for Owner in a faithful, diligent and efficient manner: (a) coordinate
the plans of tenants for moving their personal effects into the Property or out
of it, with a view toward scheduling such movements so that there shall be a
minimum of inconvenience to other tenants; (b) maintain business like relations
with tenants whose service requests shall be received, considered and recorded
in systematic fashion in order to show the action taken with respect to each;
(c) use its best efforts to (i) collect all monthly rents due from tenants and
rent from users or lessees of other non-dwelling facilities on the Property, if
any; (ii) request, demand, collect, receive and receipt for any and all charges
or rents which become due to Owner, and (iii) take such legal action, at Owner's
expense, as may be necessary or desirable to evict tenants delinquent in payment
of monthly rental, other charges (security deposits, late charges, etc.); (d)
use its best efforts at all times during the term of this Agreement to operate
and maintain the Property according to the highest standards achievable
consistent with the operation of comparable quality units; (e) advertise when
necessary, at Owner's expense, the availability for rental for the Property
units and display "for rent" or other similar signs upon the Property, it being
understood that Manager may install one or more signs on or about the Property
stating that same is under management of Manager and may use in a tasteful
manner Manager's name and logo in any display advertising which may be done on
behalf of the Property; and (f) sign, renew and cancel tenant leases for the
Property, in compliance with standards established by Owner to bona fide
individuals, for monthly rentals established from time to time by Owner, based
on Manager's recommendations; provided, however, that Property Employees, as a
condition of employment, may occupy apartment units on a month-to-month basis
with or without an executed tenant lease.
2.03. BUDGET.
(a) Manager shall submit for Owner's approval no later than forty-five (45)
days prior to the beginning of each successive Fiscal Year the Budget for the
ensuing Fiscal Year. The Budget shall be approved by Owner fifteen (15) days
after receipt, and in the event Owner fails to approve or disapprove the Budget
within such period, the Budget shall be deemed to be approved. In the event
Owner disapproves the Budget, Owner and Manager shall jointly prepare the Budget
as soon as may be reasonably practicable. Until a new Budget is approved,
Manager shall operate on the Budget approved for the prior Fiscal Year, with the
exception of expenses for personnel which must be increased based on
2
<PAGE> 3
existing competitive conditions and expenses relating to taxes, insurance and
utilities. The Budget shall reflect the schedule of monthly rents proposed for
the new Fiscal Year; it shall also constitute a major control under which
Manager shall operate, and there shall be no substantial variances therefrom
except for the variations which have complied with Section 2.06(a).
Consequently, no expenses may be incurred or commitments made by Manager in
connection with the maintenance and operation of the Property which exceed the
amounts allocated to the total expenses for the period in question in the
approved Budget by more than ten percent (10%) without the prior written consent
of Owner; provided, however, that the foregoing limitation with respect to
incurring any expense not covered by the Budget shall not apply to expenses
relating to taxes, insurance or utilities. Manager makes no guaranty, warranty,
or representation whatsoever in connection with the accuracy of any Budget, and
Owner agrees that they are intended as good faith estimates only.
(b) In the event there shall be a substantial variance between the results
of operations for any month and the estimated results of operations for such
month as set forth in the Budget, Manager shall, upon request, furnish to Owner
within twenty (20) days after the expiration of such month, a written
explanation as to why the variance occurred.
2.04. MANAGER AND OTHER PERSONNEL. Manager, and/or an affiliate of Manager,
shall employ, discharge, and supervise all on-site employees or contractors
required for the efficient operation and maintenance of the Property. All
on-site personnel, except independent contractors and employees of independent
contractors, shall be employees of Manager, and/or an affiliate of Manager.
Manager, and/or an affiliate of Manager, shall pay all salaries of such on-site
employees. Owner shall reimburse Manager, and/or an affiliate of Manager,
monthly for the total aggregate compensation, including salary and fringe
benefits, payable with respect to the Property employees and any temporary
employees. The term "fringe benefits" as used herein, shall mean and include the
employer's contribution to a defined contribution plan and of FICA, unemployment
compensation and other employment taxes, worker's compensation, group life and
accident and health insurance premiums and disability.
If requested by Manager, Owner shall provide an apartment to a Property
Employee on a discounted basis.
2.05. CONTRACTS AND SUPPLIES.
(a) Manager shall, in the name of, and on behalf of, Owner and at Owner's
expense, consummate arrangements with concessionaires, licensees, tenants or
other intended users of the facilities of the Property, shall enter into
contracts for the furnishing to the Property of electricity, gas, water,
telephone, cleaning, vermin extermination, furnace and air-conditioning
maintenance, pest control, and any other utilities, services and concessions
which are provided in connection with the maintenance and operation of an
apartment property in accordance with standards comparable to those prevailing
in other apartment properties, and shall place purchase orders for such
equipment, tools, appliances, materials and supplies as are necessary to
properly maintain the Property.
(b) Notwithstanding subsection (a), Manager is expressly authorized in
connection with the management of the Property to acquire goods from, or utilize
services of, firms and persons, who contract with Manager through various
vendor, marketing and licensing agreements through the Lexford Preferred Vendor
Program and to receive reasonable commission income therefrom, provided that the
terms and conditions of such dealings are as favorable as could be reasonably
obtained from third parties offering similar goods and services of similar
quality and reliability. Manager shall disclose to Owner all financial
information relative to such agreements pursuant to Article V.
2.06. ALTERATIONS, REPAIRS AND MAINTENANCE.
(a) Manager shall make or install, or cause to be made and installed, or do
or cause to be done at Owner's expense and in the name of Owner, all necessary
or desirable repairs, interior and exterior cleaning, painting and decorating,
plumbing, alterations, replacements, improvements and other normal maintenance
and repair work on and to the Property as are customarily made by Manager in the
operation of apartment properties; provided, however, that no unbudgeted
expenditure in excess of $1,000 per item or a total of $5,000 annually may be
made for such purposes without the prior approval of Owner, unless emergency
repairs involving manifest danger to life or property are immediately necessary
for the preservation of the safety of the Property, or for the safety of the
tenants, or are required
3
<PAGE> 4
to avoid the suspension of any necessary service to the Property, or are
required to comply with local codes or laws in which event such expenditures may
be made by Manager without the prior approval of Owner and irrespective of the
cost limitations imposed by this Section 2.06.
(b) In accordance with the terms of the Budget or upon written demand
and/or approval (except in the case of emergency) of Owner, Manager shall, at
Owner's expense, from time to time during the term hereof, make all required
capital replacements or repairs to the Property. Any extraordinary supervisory
cost of Manager's or an affiliate of Manager's employees shall be paid for by
Owner pursuant to Section 3.03. In regard to sums necessary to cover costs of
such capital replacements or repairs, Manager shall first use any excess funds
held pursuant to Section 4.05 and then from funds furnished by Owner.
2.07. LICENSES AND PERMITS. Manager shall apply for, obtain and maintain,
in the name and at the expense of, Owner, all licenses and permits (including
deposits and bonds) required of Owner or Manager in connection with the
management and operation of the Property. Owner agrees to execute and deliver
any and all applications and other documents and to otherwise cooperate to the
fullest extent with Manager in applying for, obtaining and maintaining such
licenses and permits.
2.08. COMPLIANCE WITH LAWS. Manager, at Owner's expense, shall use its best
efforts to cause all such acts and things to be done in and about the Property
as Owner and/or Manager shall deem necessary, and Owner covenants throughout the
term of this Agreement, at its expense, to comply with all laws, regulations and
requirements of any federal, state or municipal government, having jurisdiction
respecting the use or manner of use of the Property or the maintenance or
operation thereof.
2.09. LEGAL PROCEEDINGS. Manager shall institute, in its own name or in the
name of Owner, but in any event at the expense of Owner, any and all legal
actions or proceedings which Manager deems reasonable to collect charges, rent
or other income from the Property, or to dispossess tenants or other persons in
possession, or to cancel or terminate any lease, license, or concession
agreement for the breach thereof, or default thereunder, by the tenant, licensee
or concessionaire.
2.10. DEBTS OF OWNER. In the performance of its duties as Manager, Manager
shall act solely as the agent of Owner. All debts and liabilities to third
persons incurred by Manager in the course of its operation and management of the
Property, shall be the debts and liabilities of Owner only, and Manager shall
not be liable for any such debts or liabilities, except to the extent Manager
has exceeded its authority hereunder.
ARTICLE III
FEES
----
3.01. PAYMENT OF FEE. Owner shall pay to Manager, during the term hereof,
the Management Fee, Bookkeeping Fee and Performance Fee for the current month on
or before the last day of such month.
3.02. PLACE OF PAYMENT. All sums payable by Owner to Manager hereunder
shall be payable to Manager at 6954 Americana Parkway, Reynoldsburg, Ohio
43068-4551, unless Manager shall, from time to time, specify a different address
in writing.
3.03. COMPENSATION FOR ADDITIONAL SERVICES. In the event that Owner
requests Manager to perform any services relating to (i) the restoration of the
Property following fire or other damage or destruction, (ii) any major capital
improvements program, or (iii) leasing activities for the Property, then Manager
shall undertake such services for such fees as may be agreed upon by the
parties.
4
<PAGE> 5
3.04. COMPUTER IMPLEMENTATION. Owner shall pay to Manager, at the time of
conversion from the manual system to the computerized system, a fee of $500.00
for set up and training on the computer system, if the conversion has not been
previously accomplished. Manager shall loan Property the necessary software, at
its own expense, as long as this Agreement is in effect. Hardware will be
furnished at Owner's expense and will remain the possession of the Property.
Annual maintenance contracts for the computer software and hardware will be at
Owner's expense.
ARTICLE IV
PROCEDURE FOR HANDLING RECEIPTS & OPERATING CAPITAL
---------------------------------------------------
4.01. BANK DEPOSITS. All monies received by Manager for, or on behalf of,
Owner shall be deposited by Manager with the Depository. Manager shall maintain
accounts for such funds consistent with the system of accounting of the
Property. All funds on deposit shall be and shall remain under the sole and
exclusive control of Manager, subject to the provisions hereof. All monies of
Owner held by Manager pursuant to the terms hereof shall be held by Manager in
trust for the benefit of Owner to be held and disbursed as herein provided.
4.02. SECURITY DEPOSIT ACCOUNT. All tenant security deposits shall be
deposited in the Operating Account and shall be disbursed in accordance with the
applicable lease agreements pursuant to which such deposits have been made. In
the event that applicable law requires that tenant security deposits be held in
a separate account, such account shall be established by Manager as approved by
Owner.
4.03. DISBURSEMENT OF DEPOSITS. Manager shall disburse and pay all funds on
deposit on behalf of, and in the name of, Owner in such amounts and at such
times as the same are required in connection with the ownership, maintenance and
operation of the Property on account of all taxes, assessments and charges of
every kind imposed by any governmental authority having jurisdiction over the
Property, and all costs and expenses of maintaining, operating, and supervising
the operation of the Property, including, but not limited to, salaries, fringe
benefits and expenses of the Property Employees, insurance premiums, debt
services, capital expenditures, legal and accounting fees and the cost and
expense of utilities, services and concessions. Owner agrees to reimburse
Manager for any costs of Manager's advertising staff that are allocable to the
placement and/or creation of advertising for the Property, subject to Owner's
approval, which will not be unreasonably withheld. Manager shall properly
utilize all escrows and reserves established for their intended purposes and not
use operating funds in lieu thereof other than as an advance to be promptly
reimbursed.
4.04. WORKING CAPITAL. In addition to the funds derived from the operation
of the Property, Owner shall furnish and maintain in the operating accounts in
such bank or banks such other funds as may be necessary to discharge financial
commitments required to efficiently operate the Property, to meet all payrolls
and satisfy, before delinquency, all accounts payable. Manager shall have no
responsibility or obligation with respect to the furnishing of such funds.
4.05. EXCESS FUNDS.
(a) Any excess operating funds shall be transferred at the written request
of Owner to a bank account opened and maintained solely by Owner, provided that
Manager shall not be required to make any such transfer if the transfer would
reduce the balance of operating funds below those funds reasonably required to
pay ongoing or anticipated operating expenses for one month; provided that
Manager may maintain sufficient reserves to pay, when due, non- monthly
recurring expenses such as real estate taxes and insurance premiums.
(b) Unless directed to transfer excess operating funds by Owner pursuant to
subparagraph (a) above, Manager shall use its best efforts to keep any excess
operating funds, including security deposits, in an interest-bearing account.
All interest and income earned on deposits and investments shall constitute a
part of Gross Receipts.
5
<PAGE> 6
4.06. AUTHORIZED SIGNATORIES. Any persons from time-to-time designated by
Manager shall be authorized signatories on all bank accounts established by
Manager hereunder and shall have authority to make disbursements from such
accounts. Funds may be withdrawn from all bank accounts established by Manager
in accordance with this Article IV, only upon the signature of two individuals
who have been granted that authority by Manager and funds may not be withdrawn
from such accounts by Owner unless Manager is in default hereunder. All persons
who are authorized signatories or who in any way handle funds for the Property
shall be bonded in the minimum amount of $500,000. Any expense relating to such
bond for on-site employees shall be borne by Owner and for off-site employees,
by Manager.
ARTICLE V
ACCOUNTING
----------
5.01. BOOKS AND RECORDS. Manager shall keep, on an accrual basis, on behalf
of Owner, or shall supervise and direct the keeping of a comprehensive system of
office records, books and accounts pertaining to the Property. Such records
shall be subject to examination at the office where they are maintained by Owner
or its authorized agents, attorneys and accountants at all reasonable hours.
5.02. PERIODIC STATEMENTS AND AUDITS.
(a) On or before fifteen (15) days following the end of each calendar
month, Manager shall deliver, or cause to be delivered, to Owner (i) an income
and expense statement showing the results of operation of the Property for the
preceding calendar month and the Fiscal year to date; (ii) a comparison of
income and expenses to the Budget; and (iii) cash balances for savings and
operating accounts as of the last day of such month. Manager shall, at its
option, (i) preserve all invoices for a period of four (4) years or (ii) at the
expiration of each Fiscal Year, deliver all invoices to Owner. Such statements
and computations shall be prepared from the books of account of the Property.
(b) Within forty-five (45) days after the end of such Fiscal Year, Manager
will also deliver, or cause to be delivered, to Owner, an income and expense
statement as of Fiscal Year end, and the results of operation of the Property
during the preceding Fiscal Year.
ARTICLE VI
GENERAL COVENANTS OF OWNER AND MANAGER
--------------------------------------
6.01. OPERATING EXPENSES. Owner shall be solely liable for the costs and
expenses of maintaining and operating the Property, and shall pay, or Manager
shall pay on Owner's behalf from Property funds, all such costs and expenses,
including, without limitation the salaries of all Property Employees.
6.02. OWNER'S RIGHT OF INSPECTION AND REVIEW. Owner and its accountants,
attorneys and agents shall have the right to enter upon any part of the Property
at all reasonable times during the term of this Agreement for the purpose of
examining or inspecting the Property or examining or making extracts of books
and records of the Property, but any inspection shall be done with as little
disruption to the business of the Property as possible. Books and records of the
Property shall be kept, beginning the date hereof, at the Property or at the
location where any central accounting and bookkeeping services are performed by
Manager but at all times shall be the property of Owner.
6.03. HOLD HARMLESS. Except for the grossly negligent acts or omissions of
Manager and/or any employee or agent of Manager, and/or an affiliate of Manager,
Owner agrees to hold and save Manager or an affiliate of Manager free and
harmless for any error of judgment and from any and all claims for damage for
bodily injury and for damage to, or destruction of, property arising from any
cause either in and about the Property or elsewhere when Manager is carrying out
the provisions of this Agreement or acting under the express or implied
directions of Owner, including the
6
<PAGE> 7
loss of use of such property following and resulting from such damage or
destruction. Owner's indemnification of Manager as provided herein shall survive
the expiration or earlier termination of this Agreement.
6.04. COVENANTS CONCERNING PAYMENT OF OPERATING EXPENSES. Owner covenants
to pay all sums for operating expenses in excess of Gross Receipts required to
operate the Property upon written notice and demand from Manager within thirty
(30) days after receipt of written notice. Owner further recognizes that the
Property may be operated in conjunction with other phases and costs may be
allocated or shared between such phases on a more efficient and less expensive
method of operation. In such regard, Owner consents to the equitable allocation
of costs and/or the sharing of any expenses in an effort to save costs and
operate the Property in a more efficient manner.
ARTICLE VII
DEFAULTS AND TERMINATION RIGHTS
-------------------------------
7.01. DEFAULT BY MANAGER. Manager shall be deemed to be in default
hereunder in the event Manager shall materially fail to keep, observe or perform
any material covenant, agreement, term or provision of this Agreement to be
kept, observed or performed by Manager, and such default shall continue for a
period of thirty (30) days after notice thereof by Owner to Manager, or if such
default cannot be cured within thirty (30) days, then such additional period as
shall be reasonable, provided Manager is capable of curing same and has
proceeded to cure such default.
7.02. REMEDIES OF OWNER. Upon the occurrence of an event of default by
Manager as specified in Section 7.01 hereof, Owner shall be entitled to
terminate this Agreement, and upon any such termination, Owner shall have the
right to pursue any remedy it may have at law or in equity, it being expressly
understood that although Owner shall have no further obligation to pay any Fee
due hereunder, Manager shall remain liable for any losses suffered as a result
of Manager's default and the resulting termination of this Agreement. Upon such
termination, Manager shall deliver to Owner any funds, books and records of
Owner then in the possession or control of Manager.
7.03. DEFAULTS BY OWNER. Owner shall be deemed to be in default hereunder
in the event Owner shall fail to keep, observe or perform any material covenant,
agreement, term or provision of this Agreement to be kept, observed or performed
by Owner, and such default shall continue for a period of thirty (30) days after
notice thereof by Manager to Owner, or if such default cannot be cured within
thirty (30) days, then such additional period as shall be reasonable, provided
that Owner is capable of curing same and has proceeded to cure such default.
7.04. REMEDIES OF MANAGER. Upon the occurrence of an event of default by
Owner as specified in Section 7.03 hereof, Manager shall be entitled to
terminate this Agreement, and upon any such termination by Manager pursuant to
this Section 7.04, Manager shall have the right to pursue any remedy it may have
at law or in equity, except that Owner shall continue to be obligated to pay and
perform all of its obligations which have accrued as of the date of termination
and provided further that the Fee payable under Section 3.01 shall continue to
be paid through the date of termination.
7.05. TERMINATION WITHOUT CAUSE. Notwithstanding any provision of this
Agreement to the contrary, Manager may terminate this Agreement at any time
without liability therefor by giving thirty (30) days written notice thereof to
Owner. Notwithstanding any provision of this Agreement to the contrary, Owner
may terminate this Agreement without cause, prior to the expiration of its
stated term, only upon payment to Manager of the damages incurred by Manager as
a consequence of such premature termination. The parties acknowledge that the
actual damages incurred by Manager as a consequence of a termination by Owner
without cause or a termination by Manager upon the occurrence of an event of
default hereunder by Owner would be difficult or impossible to calculate with
precision, and, therefore, the parties stipulate and agree that such damages
shall be measured by (a) multiplying the compensation payable to Manager for the
first full calendar month under the Original Term of this Agreement by sixty
(60) (or in the case of any Additional Term, by twelve (12)) and (b) reducing
the resulting amount (but not below zero) by the amount
7
<PAGE> 8
of all compensation actually paid to Manager pursuant to this Agreement since
the commencement of such term. The parties intend the foregoing calculation to
constitute a measure of liquidated damages, and not a penalty.
7.06. EXPIRATION OF TERM. Upon the expiration of the Original Term or any
Additional Term hereof pursuant to Section 1.07 hereof, unless sooner terminated
pursuant to Section 7.03, 7.05, 9.09 or 9.12, Manager shall deliver to Owner all
funds, including tenant security deposits, books and records of Owner then in
possession or control of Manager, save and except such sums as are then due and
owing to Manager hereunder.
ARTICLE VIII
INSURANCE
---------
8.01. OWNER'S INSURANCE COVERAGE. Manager shall cause to be procured and
maintained, to the extent requested by Owner, insurance coverage with regard to
the Property. Manager shall promptly investigate and make a full written report
as to all accidents or claims for damage relating to the ownership, operating
and maintenance of the Property, including any damage or destruction to the
Property and the estimated cost of repair, and shall cooperate and make any and
all reports required by any insurance company in connection therewith. All
general public liability and other liability policies carried by or for Owner
shall name Owner and Manager as co-insureds.
8.02. MANAGER'S INSURANCE COVERAGE. Pursuant to the provisions of Section
4.03, Manager shall provide and maintain, so long as this Agreement is in force,
worker's compensation, or similar insurance coverage, in full compliance with
all applicable state and federal laws and regulations covering all employees of
Manager, and/or an affiliate of Manager, performing work with respect to the
Property operations.
8.03. SUBROGATION AND INDEMNITY OR DEDUCTIBLE PROVISIONS.
(a) Any insurance which is procured and maintained which in any way is
related to the Property or the authorized activities connected therewith, is for
the sole benefit of the party securing such insurance and others named as
insureds and Manager and Owner hereby release the other from all rights of
recovery under or through subrogation or otherwise for any loss or damage to the
extent recovery is made from insurance. Any insurance which is procured and
maintained by Manager insuring the interest and property of Owner and others may
contain indemnity or deductible provisions and the cost of such provisions shall
be borne by the Owner.
(b) Owner and Manager hereby waive against the other any and all claims and
demands of whatsoever nature for damages, loss or injury to the other's property
in, upon or about the Property, except for claims and demands arising out of the
gross negligence of willful misconduct of Owner, Manager, Manager's affiliate,
or either of their respective agents, employees, officers or contractors.
(c) Owner shall indemnify and hold harmless Manager and Manager's agents,
officers, employees, and employees of Manager affiliates, from any and all
losses, costs, damage or expenses resulting or arising from the effecting and
maintaining, or the failure to procure and maintain, any insurance coverage
other than that specifically required by Owner, in writing, or as set forth
herein to be maintained by Manager.
ARTICLE IX
MISCELLANEOUS PROVISIONS
------------------------
9.01. GOVERNING LAW. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of Ohio regardless of where
the Property is located.
8
<PAGE> 9
9.02. NOTICES. Owner shall designate one person as Owner's representative
in all dealings with Manager, who shall, until further notice, be the person
whose name is indicated beneath Owner's address set forth on the signature page
hereof. Any notice or communication hereunder must be in writing, and may be
given by registered or certified mail, and if given by registered or certified
mail, same shall be deemed to have been given and received when a registered or
certified letter containing such notice, properly addressed, with postage
prepaid, is deposited in the United States mail; and if given otherwise than by
registered mail, it shall be deemed to have been given when delivered to and
received by the party to whom it is addressed. Such notices or communications
shall be given to the parties hereto at the addresses set forth opposite the
names of the respective parties on the signature page hereof. Any party hereto
may, at any time, by giving ten (10) days written notice to the other party
hereto, designate any other address in substitution of the foregoing address to
which such notice or communication shall be given.
9.03. SEVERABILITY. If any term, covenant or condition of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or such other
documents, or the application of such term, covenant or condition to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term, covenant or condition of this
Agreement or such other documents shall be valid and shall be enforced to the
fullest extent permitted by law.
9.04. NO JOINT VENTURE OR PARTNERSHIP. Owner and Manager hereby agree that
nothing contained herein or in any document executed in connection herewith
shall be construed as making Manager and Owner joint venturers or partners. In
no event shall Manager have any obligation or liability whatsoever with respect
to any debts, obligations or liabilities of Owner.
9.05. MODIFICATION/TERMINATION. This Agreement terminates any and all prior
management agreements between Owner and Manager relating to the Property, and
any amendment, modification, termination or release hereof may be effected only
by a written instrument executed by Manager and Owner.
9.06. ATTORNEYS' FEES. Should either party employ an attorney or attorneys
to enforce any of the provisions hereof or to protect its interest in any manner
arising under this Agreement, or to recover damages for the breach of this
Agreement, the non-prevailing party in any action (the finality of which is not
legally contested) agrees to pay to the prevailing party all reasonable costs,
damages and expenses, including attorneys' fees, expended or incurred in
connection therewith.
9.07. TOTAL AGREEMENT. This Agreement is a total and complete integration
of any and all undertakings existing between Manager and Owner and supersedes
any prior oral or written agreements, promises or representations between them.
9.08. APPROVALS AND CONSENTS. If any provision hereof requires the approval
or consent of Owner or Manager to any act or omission, such approval or consent
shall not be unreasonably withheld or delayed.
9.09. CASUALTY. In the event that the Property, or any portion thereof, is
substantially or totally damaged or destroyed by fire, tornado, windstorm, floor
or other casualty during the term of this Agreement, Manager or Owner may
terminate this Agreement upon giving the other party written notice of
termination on or before the date which is thirty (30) days after the date of
such casualty. In the event of termination pursuant to this Section 9.09,
neither party hereto shall have any further liability hereunder.
9.10. COMPETITIVE PROPERTIES. Manager may, individually or with others,
engage or possess an interest in any other properties and ventures of every
nature and description, including but not limited to, the ownership, financing,
leasing, operation, management, brokerage, development and sale of real property
and apartment properties other than the Property, whether or not such other
ventures or properties are competitive with the Property, and Owner shall not
have any right to the income or profits derived therefrom.
9
<PAGE> 10
9.11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their permitted successors
and assigns. Either Manager or Owner may assign this Agreement upon obtaining
the other party's prior written consent; provided, however, that Manager shall
be permitted to collaterally assign this Agreement to its lender.
9.12. SALE OF THE PROPERTY. In the event the Property is sold, conveyed or
transferred during the term hereof, Owner may assign this Agreement to the
purchaser of the Property, subject to obtaining Manager's prior written consent.
In the event of any termination of this Agreement by Owner as a result of a bona
fide sale of the Property without the prior written consent of Manager, Owner
shall pay to Manager a termination fee equal to the amount due pursuant to
Section 7.05 to the extent that, as a result of the payment of such fee,
distributions to limited partners of Owner are not thereby reduced.
9.13 DUPLICATE ORIGINALS; COUNTERPARTS. This Agreement may be executed in
any number of duplicate originals and each duplicate original shall be deemed to
be an original. This Agreement may be executed in several counterparts, each of
which counterparts shall be deemed an original instrument and all of which
together shall constitute a single Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Management
Agreement as of the day and year first above written.
ADDRESS: OWNER:
6954 Americana Parkway ________________________________
Reynoldsburg, Ohio 43068
By: ________________________________
ATTN: Paul R. Selid, Vice President Managing General Partner
By: ________________________________
Paul R. Selid, Vice President
ADDRESS: MANAGER:
8615 Freeport Parkway
Suite 200 BY: LEXFORD PROPERTIES, INC.
Irving, TX 75063
ATTN: Pat Holder, President BY: ________________________________
Pat Holder, President
10
<PAGE> 1
PARTNERSHIP ASSET MANAGEMENT AGREEMENT
THIS AGREEMENT made and entered into effective as of the 1st day of
January, 1995, by and between ______________________, a(n)____________________
Limited Partnership (hereinafter referred to as "Partnership"), and Cardinal
Apartment Management Group, Inc. an Ohio corporation (hereinafter referred to as
"CAMG").
W I T N E S S E T H:
WHEREAS, employees of CAMG have had experience in the management of the
affairs and investments of real estate limited partnerships;
WHEREAS, the Partnership wishes to obtain the services of CAMG to perform
administrative functions and asset management services, and CAMG wishes to
perform such services for the Partnership.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises, covenants, obligations and agreements hereinafter set forth, and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto, intending to be and being legally bound, do hereby agree as
follows:
1. EMPLOYMENT
The Partnership hereby employs CAMG exclusively to provide partnership
administrative services and asset management services.
2. TERM
(A) The term of this Agreement shall be for a period of three (3) years
commencing January 1, 1995 and, unless earlier terminated as provided in this
Section 2, shall expire on December 31, 1997.
(B) At the expiration of the initial three year term, it is the express
intention of the parties hereto that this Agreement shall automatically renew
itself for successive one year terms unless terminated as herein provided.
(C) Either party may terminate this Agreement upon thirty (30) days prior
written notice to the other. In the event this Agreement is terminated by the
Partnership, and such termination is not the result of CAMG's failure or refusal
to perform as provided in this Agreement, then CAMG shall receive within sixty
(60) days of termination, a termination fee of 1% times the average gross rental
income of the partnership over the period of twelve (12) complete months
immediately preceding the month of termination, times the number of months
remaining in the initial term (or, as the case may be, in any renewal term)
hereunder, as if this Agreement had not been terminated.
(D) In the event that CAMG shall fail or refuse to perform any of its
material covenants, obligations or duties as provided in this Agreement in a
manner consistent with the standard of care customarily employed by the
exclusive administrator of a real estate limited partnership, Partnership shall
have the right at any time after written notice from Partnership and the failure
by CAMG to cure such failure or refusal within thirty (30) days after receipt of
such notice, to terminate this Agreement by written notice to CAMG without
penalty.
3. DUTIES OF CAMG
CAMG accepts the employment and agrees:
(a) To perform partnership administrative services, including but not
limited to the following: preparation and distribution of reports to
<PAGE> 2
Partners with respect to operations, finances, management and all other matters
affecting their interests; allocation and distribution of funds to Partners;
supervision, review and distribution of Partnership tax returns and income tax
computations of deductions allocable to each Partner in accordance with the
limited partnership agreement; supervision, review and filing of all real and
personal ad valorem property tax returns required to be filed by Partnership;
and participation and supervision of professionals involved in examination of
Partnership filings.
(b) To perform partnership asset management services, including but not
limited to Valuation of the Partnership's real property, upon request by the
Partnership; advice regarding whether and on what terms to sell, refinance, make
material renovations or improvements, or otherwise to improve, finance or
dispose of the Partnership's real estate; analysis and recommendation of
opportunities for maximizing the investment yield on Partnership cash balances
pending their disbursement; and such other and management services as the
Partnership may reasonably request from time to time.
(c) The above services shall be performed under the supervision of the
General Partner(s) of the Partnership.
(d) CAMG, at its expense, shall maintain or cause to be maintained true and
accurate original records reflecting the information provided to the Partners
and any other reporting entity. CAMG shall maintain a copy or microfilm copy of
all such records at 6954 Americana Parkway, Reynoldsburg, Ohio 43068, or such
other principal office as CAMG determines is necessary.
(e) The Limited and General Partners, at their expense, shall have the
right at all reasonable times during normal business hours to audit, examine and
make copies of or extracts from the records and reports maintained by CAMG
pursuant to Section 3(d).
4. STANDARD OF CARE, LIABILITY
In the performance of its duties and obligations under this Agreement, CAMG
shall diligently and in good faith seek to protect the property rights and
interests of the partners in the Partnership.
CAMG shall not be liable for any error of judgment or for any mistake of
fact or law, or for anything it may do or refrain from doing hereafter, except
in cases of willful misconduct or gross negligence.
5. COMPENSATION
(A) As compensation for CAMG's services as the exclusive administrator of
the Partnership, the Partnership shall, on or before the tenth day of each
calendar month during the initial and any renewal term of this Agreement, shall
pay to CAMG one (1%) percent of the sum of gross rental income collected by or
for the account of the Partnership during the immediately proceeding month from
the operation of the Partnership; provided, however, that there shall be
excluded or deducted from "gross rental income" (i) cash or credit refunds paid
to customers upon transactions included in gross rental income; and (ii) the
amount of any city, county, state or federal sales, use, luxury or excise taxes
on such sales which are required to be collected from the customer (but included
in the price or stated separately therefrom) and paid to the taxing authorities.
6. ASSIGNMENT
CAMG shall have the right to assign its rights and delegate its duties
hereunder without Partnership's consent to another administrator of recognized
standing. CAMG shall give Partnership thirty (30) days written notice prior to
an assignment.
<PAGE> 3
7. GENERAL PROVISIONS
(A) MODIFICATIONS, WAIVER. No change or modification of this Agreement
shall be valid or binding upon the parties hereto, nor shall any waiver of any
term or condition, unless such change, modification or waiver shall be in
writing and signed by the parties hereto.
(B) BINDING EFFECT. Except as otherwise provided herein, this Agreement
shall inure to the benefit of and shall be binding upon the parties hereto,
their legal representatives, transferees, successors and assigns.
(C) DUPLICATE ORIGINALS. For the convenience of the parties hereto, any
number of counterparts hereof may be executed and each such counterpart shall be
deemed to be an original instrument.
(D) CONSTRUCTION. This Agreement shall be interpreted and construed in
accordance with the laws of the state of Ohio, exclusive of conflicts of laws
provisions thereof. The titles of the sections and sub-sections herein have been
inserted as a matter of convenience of reference only and shall not control or
affect the meaning or construction of any of the terms or provisions herein.
(E) ENTIRE AGREEMENT. This Agreement is intended by the parties hereto to
be the final expression of their agreement and is the complete and exclusive
statement of the terms thereof, notwithstanding any representation or statement
to the contrary heretofore made.
(F) NOTICES. All notices and other communications required under this
Agreement shall be in writing and shall be (i) transmitted by facsimile, (ii)
sent by Federal Express or other overnight delivery service, or (iii) sent by
registered or certified U.S. Mail, return receipt required, addressed in either
case as follows:
If intended for CAMG, to:
Cardinal Apartment Management Group, Inc.
6954 Americana Parkway
Reynoldsburg, OH 43068
ATTN: President
With a copy to:
General Counsel
Cardinal Realty Services, Inc.
6954 Americana Parkway
Reynoldsburg, OH 43068
(614) 575-5214
FAX: (614) 575-5240
If intended for Partnership, to:
_________________________________
ATTN: Partnership Administration
6954 Americana Parkway
Reynoldsburg, OH 43068
or at such other address or to the attention of such other person, as CAMG or
Partnership shall request by written notice given as herein provided. Any
written notice or other communication given as herein provided shall be deemed
to have been sufficiently given and received for all purposes
<PAGE> 4
hereunder on the date said return receipts are signed, provided that if either
party refuses to sign and return receipt on the first delivery or after proper
notice by the United States Postal Service, then the date three (3) days
following the date on which the same is deposited, postage prepaid, in a United
States general or branch post office or mailbox.
IN WITNESS WHEREOF, the parties have affixed their hands and seals on the
date first above written.
___________________________
a(n) ______________________ limited partnership
By: Cardinal Realty Services, Inc.
Its:General Partner
By:________________________
Its:_______________________
Cardinal Apartment Management
Group, Inc.
By:________________________
Its:_______________________
<PAGE> 1
EXTENDED
PARTNERSHIP ADMINISTRATION AGREEMENT
THIS AGREEMENT made and entered into effective as of the ___ day of
___________ 199_, by and between _____________, a(n) ________________ Limited
Partnership (hereinafter referred to as "Partnership"), and Cardinal Apartment
Management Group, Inc., an Ohio corporation (hereinafter referred to as "CAMG").
W I T N E S S E T H:
WHEREAS, employees of CAMG have had experience in the management of affairs
of investments and limited partnerships;
WHEREAS, the Partnership wishes to obtain the services of CAMG to perform
administrative functions to furnish information and deal with Limited Partners,
and CAMG wishes to perform such services for the Partnership;
WHEREAS, an affiliate of CAMG has performed the same administrative
services for the Partnership pursuant to a written agreement, prior to the date
of this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
promises, covenants, obligations and agreements hereinafter set forth, and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto, intending to be and being legally bound, do hereby agree as
follows:
1. EMPLOYMENT
The Partnership hereby employs CAMG exclusively to provide partnership
administrative services, furnish information, and deal with Limited Partners.
2. TERM
(A) The term of this Agreement shall be for a period of one (1) year
commencing January 1, 1995 unless earlier terminated as provided in this Section
2.
(B) At the expiration of the initial one year term, it is the express
intention of the parties hereto that this Agreement shall automatically renew
itself for successive one year terms unless terminated as herein provided.
(C) Either party may terminate this Agreement without liability therefor
upon thirty (30) days prior written notice to the other, effective upon the
expiration of the then current term.
(D) In the event that CAMG shall fail or refuse to perform any of its
material covenants, obligations or duties as provided in this Agreement in a
manner consistent with the standard of care customarily employed by the
exclusive administrator of a real estate limited partnership, Partnership shall
have the right at any time after written notice from Partnership and the failure
by CAMG to cure such failure or refusal within thirty (30) days after receipt of
such notice, to terminate this Agreement by written notice to CAMG.
3. DUTIES OF CAMG
CAMG accepts the employment and agrees:
<PAGE> 2
(a) To perform partnership administration services, including but not
limited to the following: preparation and distribution of reports to Limited
Partners with respect to operations, finances, management and all other matters
affecting their interests; allocation and distribution of funds to Limited
Partners; supervision, review and distribution of Partnership tax returns and
income tax computations of deductions allocable to each Limited Partner;
supervision, review and filing of all real and personal ad valorem property tax
returns required to be filed by Partnership; and participation and supervision
of professionals involved in examination of Partnership filings.
(b) The above services shall be performed under the supervision of the
General Partner(s) of the Partnership.
(c) CAMG, at its expense, shall maintain or cause to be maintained true and
accurate original records reflecting the information provided to the Limited
Partners and any other reporting entity. CAMG shall maintain a copy or microfilm
copy of all such records at 6954 Americana Parkway, Reynoldsburg, Ohio 43068, or
such other principal office as CAMG determines is necessary.
(d) The Limited and General Partners, at their expense, shall have the
right at all reasonable times during normal business hours to audit, examine and
make copies of or extracts from the records and reports maintained by CAMG
pursuant to Section 3(C).
4. STANDARD OF CARE, LIABILITY
(A) In the performance of its duties and obligations under this Agreement,
CAMG shall diligently and in good faith seek to protect the property rights and
interests of the partners in the Partnership.
(B) CAMG shall not be liable for any error of judgment or for any mistake
of fact or law, or for anything it may do or refrain from doing hereafter,
except in cases of willful misconduct or gross negligence.
5. COMPENSATION
(A) As compensation for CAMG's services as the exclusive administrator of
the Partnership, the Partnership on or before the tenth day of each calendar
month during the Term of the Agreement, shall pay to CAMG one (1%) percent of
the sum of gross rentals and other income of any nature whatsoever collected by
or for the account of the Partnership during the immediately proceeding month
from the operation of the Partnership.
6. ASSIGNMENT
(A) CAMG shall have the right to assign its rights and delegate its duties
hereunder without Partnership's consent to another administrator of recognized
standing. CAMG shall give Partnership thirty (30) days written notice prior to
an assignment.
7. GENERAL PROVISIONS
(A) MODIFICATIONS, WAIVER. No change or modification of this Agreement
shall be valid or binding upon the parties hereto, nor shall any waiver of any
term or condition, unless such change, modification or waiver shall be in
writing and signed by the parties hereto.
(B) BINDING EFFECT. Except as otherwise provided herein, this Agreement
shall inure to the benefit of and shall be binding upon the parties hereto,
their legal representatives, transferees, successors and
<PAGE> 3
assigns.
(C) DUPLICATE ORIGINALS. For the convenience of the parties hereto, any
number of counterparts hereof may be executed and each such counterpart shall be
deemed to be an original instrument.
(D) CONSTRUCTION. This Agreement shall be interpreted and construed in
accordance with the laws of the State of Ohio, exclusive of conflicts of laws
provisions thereof. The titles of the sections and sub-sections herein have been
inserted as a matter of convenience of reference only and shall not control or
affect the meaning or construction of any of the terms or provisions herein.
(E) ENTIRE AGREEMENT. This Agreement is intended by the parties hereto to
be the final expression of their agreement and is the complete and exclusive
statement of the terms thereof, notwithstanding any representation or statement
to the contrary heretofore made.
(F) NOTICES. All notices and other communications required under this
Agreement shall be in writing and shall be (i) transmitted by facsimile, (ii)
sent by Federal Express or other overnight delivery service, or (iii) sent by
registered or certified U.S. Mail, return receipt required, addressed in either
case as follows:
If intended for CAMG, to:
Cardinal Apartment Management Group, Inc.
6954 Americana Parkway
Reynoldsburg, Ohio 43068
(614) 575-5220
ATTN: President
With a copy to:
General Counsel
Cardinal Apartment Management Group, Inc.
6954 Americana Parkway
Reynoldsburg, Ohio 43068
(614) 575-5214
FAX: (614) 575-5240
If intended for Partnership, to:
__________________________________
6954 Americana Parkway
Reynoldsburg, Ohio 43068
or at such other address or to the attention of such other person, as CAMG or
Partnership shall request by written notice given as herein provided. Any
written notice or other communication given as herein provided shall be deemed
to have been sufficiently given and received for all purposes hereunder on the
date said return receipts are signed, provided that if either party refuses to
sign and return receipt on the first delivery or after proper notice by the
United States Post Office, then the date three (3) days following the date on
which the same is deposited, postage prepaid, in the United States general or
branch post office or mailbox.
<PAGE> 4
IN WITNESS WHEREOF, the parties have affixed their hands and seals on
the date first above written.
_________________________________________
a(n) __________________ limited partnership
By:
Vice President of its General
Partner
Cardinal Apartment Management
Group, Inc.
By:______________________________
Its:_____________________________
<PAGE> 1
AGREEMENT FOR TAX APPEAL SERVICES
This Agreement for Tax Appeal Services ("Agreement") is made on this
_____ day of ___________, 199_____, by and between CARDINAL REALTY SERVICES,
INC. ("Cardinal") and ________________________________________________
("Owner").
1. DEFINITIONS: For the purposes of this Agreement, the following
terms shall have the meanings as hereinafter set forth:
(a) Property: the real property located in the City of
___________________, County of _______________ and State of
______________, being Tax Parcel No.___________.
(b) Tax Appeal Services: those services described in Section 3 of
this Agreement.
(c) Fees: Twenty-five Percent (25%) of the following amounts: (i) the
difference between the annual real estate taxes for the property
for the year 199____ and the first year after the reduction
obtained as a result of the performance by Cardinal of the tax
appeal services and (ii) any refund of previously paid real
estate taxes, including any interest or penalties, obtained as a
result of the performance by Cardinal of the tax appeal services.
(d) Expenses: all amounts paid by Cardinal in connection with the
performance of tax appeal services including, without limitation,
filing fees, postage copying, overnight delivery charges,
reasonable amounts for travel outside the Greater Columbus
Metropolitan area, and appraisals or other professional services
performed by any personnel which are not employed on a full-time
basis by Cardinal.
2. ENGAGEMENT: The Owner hereby agrees to engage, and hereby does
engage, Cardinal for the purpose of providing tax appeal services and to pay
Cardinal the fees and expenses pursuant to the terms and conditions specified
herein.
3. SERVICES: Cardinal agrees to provide the following services in
connection with the real estate taxes of the property:
(a) an analysis of the real estate taxes as they relate to the
valuation of the property as assessed by the appropriate
governmental authority and the amount of the real estate taxes
levied thereby;
(b) a recommendation to the Owner of the advisability of filing an
appeal of the assessed valuation of the property or the amount of
the taxes as they may relate thereto;
(c) the filing and prosecution of an appeal with the appropriate
governmental authority seeking a reduction of the amount of the
real estate taxes;
(d) completion and signature of any forms or other documents in
connection with the performance of any of the services enumerated
herein;
(e) the retention of any professional real estate appraisers or other
professional whose services are required in order to file an
appeal for a reduction of the real estate taxes;
(f) negotiating any settlement of any appeal relating to the real
<PAGE> 2
estate taxes with the appropriate governmental authority subject
to the terms set forth in this Agreement; and
(g) any other services reasonably required in connection with any of
the foregoing to obtain a reduction in the amount of real estate
taxes levied against the property.
4. APPOINTMENT OF AGENT: Owner does hereby appoint Cardinal as its
sole and exclusive agent and attorney-in-fact for the performance of the tax
appeal services and authorizes Cardinal to execute, on its behalf, all forms or
other legal documents which are reasonably required in the rendering of the tax
appeal services. Owner authorizes Cardinal to enter upon the property for the
purpose of making any physical inspection as may be deemed necessary by
Cardinal. Owner agrees to permit Cardinal access to any records maintained by
the Owner which relate to the real estate taxes or the valuation of the
property.
5. DECISION TO APPEAL OR SETTLE: The Owner shall retain all rights
relating to the decision to appeal the assessed valuation of the property or the
amount of the real estate taxes. In the event an appeal is not undertaken,
whether pursuant to a recommendation by Cardinal or by the decision of the
Owner, Owner agrees to pay the fee as specified above. The Owner shall also
retain all rights to accept any settlement of any appeal, or of any offer to
settle without any appeal, which may be obtained by Cardinal in connection with
its performance hereunder.
6. PAYMENTS: Payment of fees and expenses shall be made within thirty
(30) days of the date of billing. The Owner shall be liable for all fees and
expenses due hereunder regardless of any transfer of the property, or any part
thereof, prior to the final determination of any appeal seeking a reduction in
the real estate taxes of the property.
7. MISCELLANEOUS: Nothing herein shall be construed as a guaranty or
warranty, either express of implied, by Cardinal as to any specific result from
Cardinal's performance hereunder. Notwithstanding the foregoing, Cardinal agrees
to use its best efforts to effect the most favorable outcome for the Owner in
the rendering of the taxes appeal services. In the event any of the tax appeal
services performed by Cardinal shall be adjudged, by the highest court of the
state where the property is situated, to be an unauthorized practice of law,
this Agreement shall be reformed to delete therefrom any part which has been so
adjudged. The fees shall be reduced by an amount equal to the applicable hourly
rate for the portion of the tax appeal services performed by Cardinal which have
been adjudged to be an authorized practice of law.
IN WITNESS WHEREOF, this Agreement has been made by the parties hereto
as of the date first above written.
CARDINAL REALTY SERVICES, INC. OWNER
BY:________________________________ ____________________________________
(NAME)
ITS:________________________________ BY: ________________________________
<PAGE> 1
LEASE
THIS LEASE, made effective this 24th day of February, 1998, by and
between AMERICANA INVESTMENT COMPANY, an Ohio general partnership ("Landlord"),
and LEXFORD, INC., a corporation organized and existing under and by virtue of
the laws of the State of Ohio ("Tenant").
WITNESSETH:
ARTICLE 1. GRANT AND PREMISES. Landlord for and in consideration of the
rents and covenants hereinafter mentioned does hereby demise, lease and let unto
Tenant and Tenant does hereby hire, lease and take from Landlord the following
described premises situated in the approximately 52,168 square foot building
known as 6954 Americana Parkway, Reynoldsburg, Ohio (the "Building"), which
Building, together with the approximately 3.881 acre parcel of land described in
Exhibit A hereto upon which it is located, and all improvements located thereon
are referred to as the "Project."
Being approximately 30,520 square feet of office space (the
"Office Space") and 5,600 square feet of warehouse space (the
"Warehouse Space") for a total of 36,120 square feet in the
location and configuration depicted on Exhibit B hereto (the
Premises").
<PAGE> 2
The Project constitutes a portion of Americana Commerce Park ( "ACP")
as ACP is shown on Exhibit C hereto. The Premises shall include as an
appurtenant right the non-exclusive right of use of the parking lot on the
Project and the loading dock turn-around area between the buildings in ACP and
driveways in the Project. Tenant shall be entitled to the non-exclusive use of
the parking lot of the Project, together with other tenants of the Project and
their employees, customers, agents, guests and invitees, it being the intent of
the parties that each tenant of the Project shall have the non-exclusive use of
that number of the total parking spaces in the Project determined by dividing
the total square feet of their respective leased premises by the total leasable
square feet of the Building. It is agreed that the entire loading dock area and
turn-around area between the two buildings is a common area of ACP for the
non-exclusive use of all tenants within ACP.
ARTICLE 2. TERM. The term of this Lease shall commence on the date of
the last to occur of the following events (the "Commencement Date"): (i)
Tenant's Work, as defined in Article 11 hereof, is completed, and Tenant has
accepted the Premises; (ii) Tenant has vacated all portions of the Building
which are not a part of the Premises, leaving the same in the condition required
upon termination under the terms of the existing Lease between Landlord and
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Tenant for the Building; (iii) Tenant has occupied the Premises for the conduct
of its business; and (iv) January 1, 1998 and expire on December 31, 2004. If
Tenant holds over the expiration of the term, it is agreed that the tenancy
shall be month-to-month under the same terms and conditions as this Lease.
ARTICLE 3. RENTAL.
(a) Monthly Rental. The monthly rental shall be as set forth below,
payable without deduction or offset in advance on or before the first day of
each and every month during the term to the following address: Oakwood
Management Company, 6950 Americana Parkway, Reynoldsburg, Ohio 43068.
Annual Rent
Per Square Annual Rent for
Lease Foot for Warehouse
Years Office Space Space Annual Rental Monthly Rental
- ------- ------------ --------------- ------------- --------------
1-3 $8.75 $25,872.00 $292,922.00 $24,410.17
4-5 $9.25 $27,165.60 $309,475.60 $25,789.63
6-7 $9.75 $28,523.88 $326,093.88 $27,174.49
The first Lease Year shall commence on the Commencement Date and end on the last
day of the twelfth full month following the Commencement Date, and each
subsequent lease year shall commence on the first day of the immediately
following month, except that if the Commencement Date is a date other than
January 1, 1998, the last lease year shall be a partial lease year and shall end
on December 31, 2004. If the Commencement Date is a date other than the first
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<PAGE> 4
day of a month, the monthly rental for the first partial month shall be prorated
based upon the actual number of days of the month within the lease term.
(b) Additional Rent. Tenant shall pay any and all sums of money or
charges required to be paid by Tenant as additional rent under this Lease
promptly when the same are due, without any deduction or set-off whatsoever.
Tenant's failure to pay any such amounts or charges when due shall carry with it
the same consequences as the failure to pay Monthly Rental. All such amounts or
charges shall be payable to Landlord at the place where rent is payable.
(c) Delay or Default on Payment of Rent. In the event that Tenant shall
fail to pay any installment of rent on the date when due, or shall fail to pay
any other payment or charges due from Tenant to Landlord hereunder on the date
when due, such past due rentals or other charges shall bear interest at the
lesser of (i) the highest rate then allowable by law which Landlord might then
have charged in making an unsecured loan to Tenant or (ii) the rate of three
percent (3%) per annum above the prime rate charged by The Huntington National
Bank, Columbus, Ohio (i.e. the interest rate established by The Huntington
National Bank, Columbus, Ohio, from time to time based upon its consideration of
economic, money market, business and competitive factors) as of
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the due date (in either instance, the "Default Rate") from the due date thereof
until paid by Tenant. In like manner, all other obligations, benefits and moneys
which may be due to Landlord from Tenant under the terms hereof, or which are
paid by Landlord because of Tenant's default hereunder, shall bear interest at
the Default Rate from the due date until paid or, in the case of sums paid by
Landlord because of Tenant's default hereunder, from the date such payments are
made by Landlord until the date Landlord is reimbursed by Tenant.
ARTICLE 4. OPTIONS.
(a) Option to Renew. Tenant shall have and is hereby granted the option
to extend the term of this Lease for one (1) additional term of five (5) years.
The renewal period shall be governed by all of the provisions, terms, and
conditions of this Lease; except that the monthly rental shall be determined as
follows:
Year of Annual Rent Annual Rental for
Renewal Per Square Warehouse Total Annual
Term Foot Space Rental Monthly Rental
------- ---------- ----------------- ------------ --------------
1 $9.99 $29,236.98 $334,131.76 $27,844.32
2 $10.24 $29,967.90 $342,492.70 $28,541.06
3 $10.50 $30,717.10 $350,763.31 $29,230.26
4 $10.76 $31,485.03 $359,880.23 $29,990.02
5 $11.03 $32,272.15 $368,907.75 $30,742.31
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<PAGE> 6
In order to exercise the option as herein provided, Tenant must give to Landlord
written notice of same at least ninety (90) days prior to end of the initial
term.
(b) Option to Delete Warehouse Space from Lease. Tenant shall have a
one-time right to delete the Warehouse Space from the Premises on the third
anniversary date of the Lease (the "Warehouse Option Date") upon the following
terms and conditions:
(1) Tenant shall give written notice to Landlord (an "Election
Notice") stating its election to delete the Warehouse Space from
the Premises effective on the Warehouse Option Date not more than
one (1) year and not less than six (6) months prior to the
Warehouse Option Date.
(2) If a timely Election Notice is given, this Lease shall be
automatically amended on the Warehouse Option Date to delete the
Warehouse Space from the Premises and to adjust the rental
accordingly. At the request of either party, the parties shall
exe-cute an Amendment to Lease reflecting such changes.
(3) If a timely Election Notice is given, Tenant shall vacate the
Warehouse Space on or before the Warehouse Option Date and comply
with all terms of the Lease which apply to termination of the
Lease, including Articles 10 and 12 hereof, with respect to the
Warehouse Space.
ARTICLE 5. TAXES AND UTILITIES.
(a) Taxes and Obligations. Subject to the provisions of Article 22
hereof, Landlord shall pay all taxes, assessments (whether general or special)
and any other obligations which are or may become a lien on or levied against
the Premises and Project.
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(b) Utilities. Tenant agrees during the term hereof to pay all charges
for electricity, water, gas, heat, telephone and other utility services, used,
consumed or wasted upon the Premises. Landlord shall not be liable for the
quality, quantity or any interference with such utilities. Tenant shall, on or
prior to the Commencement Date, cause all utility services used by Tenant to be
placed in Tenant's name.
ARTICLE 6. ASSIGNMENT AND SUBLETTING. Tenant may at any time assign
this Lease or sublet any part or all of the Premises to any party whom Tenant
may reasonably select, provided that the occupancy of that party or the
operations to be conducted in or on the Premises by that party shall not be of a
more hazardous nature than the occupancy of or the operations conducted by
Tenant on the Premises at the time of said assignment or subletting. In the
event of any assigning or subletting by Tenant, Tenant shall remain liable for
the performance of its covenants as contained in this Agreement, unless the
assignee in the case of an assignment has a net worth equal to or greater than
the net worth of Tenant on the date hereof and on the date of the assignment,
which assignee is approved by Landlord in its reasonable discretion.
ARTICLE 7. USE. Tenant may use the Premises for any lawful use or
purpose. Tenant will at its own expense comply with all statutes, ordinances,
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rules, orders and regulations of federal, state or local public authorities,
subject to the provisions of Article 26 hereof.
ARTICLE 8. DAMAGE OR DESTRUCTION. If all or a part of the Premises are
rendered untenantable by reason of damage or destruction caused by perils
customarily covered under fire and extended coverage insurance, acts of God or
any cause beyond the reasonable control of Tenant, this Lease shall, at the
option of Tenant, terminate unless (a) Landlord notifies Tenant within ten (10)
days after notice from Tenant of the untenantable condition of the Premises, of
its intention to repair and restore the Premises to their former condition, and
(b) such restoration is completed within one hundred twenty (120) days from the
date Landlord receives notice of the untenantable condition of the Premises.
During the period of restoration, Tenant's rental obligation shall be abated
proportionate to the time and the extent of the damage or destruction and the
time during which and the extent to which the Premises have been untenantable.
In the event of termination, Landlord shall reimburse to Tenant any portion of
rent paid representing the portion of the term subsequent to the date of
Premises were rendered untenantable.
ARTICLE 9. MUTUAL WAIVER OF SUBROGATION. Each party hereto releases and
waives all rights of recovery against the other party, its officers, employees,
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agents, invitees and representatives for any damage to any person, or for loss
of or damage to their property or property of others under its control arising
from any cause insured against under any insurance policies carried by Landlord
and Tenant.
ARTICLE 10. SURRENDER. Tenant agrees to surrender at the termination of
this Lease possession of the Premises in as good condition and repair as the
same were in at the commencement of the term hereof except for the following:
(a) Reasonable wear and tear,
(b) Repairs and restoration to be made by Tenant or Landlord as
herein provided,
(c) Damage or destruction caused by perils customarily covered under
fire and extended coverage insurance, acts of God, or by any
other cause beyond the reasonable control of Tenant.
ARTICLE 11. TENANT IMPROVEMENT ALLOWANCE AND CONSTRUCTION OR
IMPROVEMENTS BY TENANT. Landlord shall provide an allowance in the amount of
$396,760.00 (the "Allowance Amount") to pay for Tenant's Work as hereinafter
defined. Said allowance shall be paid as follows:
(a) Landlord shall retain and pay directly to all contractors,
subcontractors, materialmen, laborers and others all sums
necessary to pay for Landlord's Work.
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(b) Tenant shall submit draw requests for construction and relocation
expenses incurred and paid to date no more frequently than
monthly, which shall include an itemization of each invoice for
which reimbursement is sought together with evidence of payment
of same.
(c) Landlord shall pay all such requests upon verification thereof
within 10 days of receipt of the request up to the total
Allowance Amount.
(d) Any portion of the Allowance Amount remaining unpaid shall be
paid by Landlord to Tenant within 30 days after all Tenant's work
(as hereinafter defined) is completed, and Tenant has fully
accepted and occupied the Premises.
Tenant shall construct or cause to be constructed a demising wall or
walls between the Premises and the remainder of the Building (the "Remaining
Space") and construct such other improvements as are necessary to separate the
Premises from the Remaining Space, provide utility services to the Remaining
Space, and allow the Remaining Space to be used separately by a separate tenant
from the Premises, including separate metering or submetering of all utilities,
and shall construct a building identification sign or signs as agreed to between
Landlord and Tenant. Tenant shall not be required to have separate meters or
submeters installed for the Remaining Space until such time as Landlord advises
Tenant that it has obtained a tenant for all or a portion of the Remaining
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Space, in which case Tenant shall cause the separate meters (or submeters to the
extent submetering is allowed by the respective utility companies) to be
installed within thirty (30) days of written notice from Landlord to do so. If
Tenant elects to provide submetering of utilities instead of separate metering,
Tenant shall be responsible for all costs of reading the meters and apportioning
the utility bills. Notwith-standing anything herein to the contrary, Tenant
shall be responsible for the payment of all utility charges for the entire
Building until the separate meters or submeters for the Remaining Space are
installed. Tenant shall also be solely responsible at its cost for making such
improvements to the Premises as are necessary to cause the Premises to be
suitable for Tenant's intended use and to comply with all applicable laws,
ordinances, building codes and regulations in effect on the Commencement Date.
All such work done under this Article 11 is referred to as "Tenant Work" and
shall be done at Tenant's expense to the extent the cost thereof exceeds the
Allowance Amount. Tenant's Work shall be done in accordance with detailed
working drawings approved by Landlord, which approval shall not be unreasonably
withheld or delayed. Tenant shall have the right to enter the Premises prior to
the Commencement Date for the purpose of doing such work, provided that upon
such entry Tenant shall maintain all required insurance upon the Premises and
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pay all utilities from such date and all provisions of the Lease relative to
occupancy and indemnification shall apply. Tenant shall provide construction
management services for Tenant's Work and shall retain a qualified general
contractor to perform Tenant's Work.
ARTICLE 12. ALTERATIONS. Tenant shall not make or cause to be made any
alterations, additions, or improvements to the Premises, or install or cause to
be installed any exterior signs, floor coverings, interior or exterior lighting,
plumbing fixtures, shades, canopies or awnings or make any changes to the
mechanical, electrical or sprinkler systems (if any) without the prior written
consent of Landlord, which consent shall not be unreasonably withheld. Tenant
shall present to Landlord plans and specifications for any such proposed work at
the time approval is sought. Subject to the foregoing, Tenant shall have the
right to make installations upon the roof of the Building for communication
devices provided the same, or their installation, does not affect the integrity
of the roof or structure of the Building.
All alterations, installations, additions and improvements in or to the
Premises, installed by Landlord and all alterations, installations, additions
and improvements to the Building made by Tenant other than Tenant's equipment,
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furniture, furnishings, trade fixtures and other personal property, shall be
deemed to have attached to the Premises and to have become the property of
Landlord upon such attachment, and upon expiration of this Lease or any renewal
term thereof, Tenant shall not remove any of such alterations, installations,
additions and improvements; provided, however, Landlord may designate by written
notice to Tenant at the time Landlord consents to such Tenant alterations,
installations, additions and improvements which Tenant alterations,
installations, additions and improvements must be removed by Tenant at the
expiration or termination of this Lease, and Tenant shall promptly remove the
same and repair any damage to the Premises caused by such removal. Tenant shall
have no obligation to remove alterations, installations, additions and
improvements installed by Landlord. All equipment, furniture, furnishings, trade
fixtures, exhaust hoods, and other personal property installed by Tenant in the
Premises shall remain Tenant's property and may be removed by Tenant at the
termination of the Lease; provided Tenant shall repair any damage to the
Premises caused by such removal; further provided that Landlord shall have the
right to remove any such personal property owned by Tenant which is not removed
by Tenant prior to the expiration date of the Lease or within thirty (30) days
after any earlier termination of the Lease, and if not claimed by Tenant within
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thirty (30) days after removal and storage, such personal property will be
deemed to have been abandoned by Tenant and may be disposed of by Landlord
without any further obligation to Tenant. Landlord hereby waives any landlord's
lien on Tenant's personal property.
Tenant shall have the right to make any non-structural alterations,
installations, additions or improvements not exceeding $10,000.00 and which do
not materially affect the building utility systems without obtaining Landlord's
consent. Tenant shall provide Landlord with copies of the drawings covering the
work.
Tenant shall not place any signs on the interior (if visible from the
exterior) or on the exterior of the Building or on the Project without
Landlord's written consent. Tenant shall maintain its sign(s) in good condition
and repair at all times during the term of this Lease. All signs shall be
installed in compliance with all applicable laws, ordinances and regulations.
Landlord shall construct a monument or building sign or signs on or outside the
Building at a location or locations mutually agreed to by Landlord and Tenant,
which shall be for the joint use of Tenant and other tenants in the Building
with the cost of such sign to be paid from the Allowance Amount under Article 11
hereof. The space on such sign identifying Tenant shall not exceed fifty eight
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and one-half percent (58.5%) of the portion of the sign used to identify tenants
in the Building.
If a mechanic's lien is filed against the Premises or the Project for,
or purporting to be for, labor or material alleged to have been furnished, or to
be furnished, to or for Tenant or any subtenant or assignee of Tenant at the
Premises, Tenant shall cause such lien to be discharged within fifteen (15) days
after receipt of written notice from Landlord, by bonding proceedings or
otherwise. If Tenant shall fail to take such actions as shall cause such lien to
be discharged within said fifteen (15) day period, Landlord may, at its option,
pay the amount of such lien or may discharge the same by bonding proceedings
and, in the event of such bonding proceedings, Landlord may require the lienor
to prosecute the appropriate action to enforce the lienor's claim. Any such
amount paid or expense incurred by Landlord, or any expense incurred or sum of
money paid by Landlord by reason of the failure of Tenant to comply with the
foregoing provisions of this Article, or in defending any such action, shall
become immediately due and payable as rent by Tenant to Landlord, together with
interest at the Default Rate thereon from the date of payment by Landlord until
paid by Tenant. Any such payment by Landlord shall not be deemed to be a waiver
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of any other rights which Landlord may have under the provisions of this Lease
or as provided by law.
ARTICLE 13. RIGHT OF ENTRY. Tenant agrees to permit Landlord, its
agents or employees, to enter the Premises at all reasonable times, with a
minimum of 24 hours' advance notice except in an emergency to show premises to
parties wishing to purchase, lease or to make repairs, alterations and
improvements. Landlord may enter the Premises at any time in cases of emergency.
ARTICLE 14. LIABILITY. Landlord shall not be liable for any damage to
property of Tenant or property of Tenant's employees, agents or invitees
resulting from perils customarily covered by fire and extended coverage
insurance, acts of God or any other cause beyond the reasonable control of
Landlord. Tenant agrees to indemnify and save harmless Landlord from any
liability, claim or demand which may arise from such damage to said property.
Tenant shall not be responsible for any damage to or destruction of the Premises
resulting from perils customarily covered by fire and extended coverage
insurance.
ARTICLE 15. DEFAULT.
(a) Events of Default by Tenant. It is expressly agreed that each of
the following shall constitute an event of default ("Event of Default")
hereunder:
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(l) The failure, neglect or refusal of Tenant to pay any
installment of rent or additional rent at the time and in
the amount as herein provided, or to pay any other monies
agreed by it to be paid promptly when and as the same shall
become due and payable under the terms hereof, and if any
such failure, neglect or refusal to pay shall continue for a
period of more than seven (7) days after Tenant's receipt of
Landlord's written notice of default.
(2) The filing of any voluntary or involuntary petition or
similar pleading under any section or sections of any
bankruptcy act against Tenant or the institution of any
voluntary or involuntary proceeding in any court or tribunal
to declare Tenant insolvent or unable to pay its debts, and
the same shall not be dismissed or discharged within thirty
(30) days after Tenant's receipt of notice thereof in
writing from Landlord.
(3) The failure, neglect or refusal of Tenant to keep and
perform any of the covenants, conditions or stipulations
herein contained and covenanted and agreed to be kept and
performed by it and such failure, neglect or refusal shall
continue for a period of more than thirty (30) days after
Tenant's receipt of notice thereof in writing from Landlord;
provided, however, that if the cause for giving such notice
involves the making of repairs or other matters reasonably
requiring a longer period of time than such thirty (30) day
period, Tenant shall be deemed to have complied with such
notice within said period of time if Tenant is diligently
prosecuting compliance with said notice or has taken the
proper steps or proceedings under the circumstances to
prevent the seizure, destruction, alteration or other
interference with the Premises by reason of non-compliance
with the requirements of any law or ordinance or with the
rules, regulations or directions of any governmental
authority, as the case may be.
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(4) The making of any assignment by Tenant of the Premises, or
part thereof, for the benefit of creditors, or should the
Premises be taken under any levy of execution or attachment
in execution against Tenant, and such levy, attachment or
assignment is not dismissed and discharged within thirty
(30) days after Tenant's receipt of written notice thereof
from Landlord.
(b) Landlord's Remedies. Upon the occurrence of any Event of Default as
set forth in Article 15(a) hereof, then Landlord, in addition to the other
rights or remedies that Landlord may have as provided by law, shall have the
right to declare this Lease terminated and the term ended.
Should Landlord take possession of the Premises, it may either
terminate this Lease or it may, from time to time, without terminating this
Lease, make such alterations and repairs as may be necessary in order to relet
the Premises, and relet the Premises, or any part thereof, for such term or
terms (which may be for a term extending beyond the term of this Lease) and at
such rental or rentals and upon such other terms and conditions as Landlord, in
its sole discretion, may deem advisable, subject to Landlord's duty to mitigate
damages. Upon each such reletting, all rentals and other sums received by
Landlord from such reletting shall be applied as follows: first, to the payment
of any indebtedness other than rent due hereunder from Tenant to Landlord;
second, to the payment of any costs and expenses of such reletting, including
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reasonable brokerage fees and attorneys' fees and of costs of such alterations
and repairs; third, to the payment of rent and other charges due and unpaid
hereunder; and fourth, the remainder, if any, shall be held by Landlord and
applied in payment of future fixed and additional rent as the same may become
due and payable hereunder. If such rentals and other sums received from such
reletting during any month is less than that to be paid during the month by
Tenant hereunder, Tenant shall pay such deficiency to Landlord. Such deficiency
shall be calculated and paid monthly. No such re-entry or taking possession of
the Premises by Landlord shall be construed as an election on its part to
terminate this Lease unless a written notice of such intention shall be given by
Landlord to Tenant or unless the termination hereof be decreed by a court of
competent jurisdiction. Notwithstanding any such reletting without termination,
Landlord may at any time hereafter elect to terminate this Lease for such
previous breach. Should Landlord at any time terminate this Lease for any
breach, in addition to any other remedies that Landlord may possess pursuant to
the terms of this Lease or as provided by law, Landlord may recover from Tenant
all damages it may incur by reason of such breach, including the cost of
recovering the Premises, reasonable attorneys' fees, and the present value at
the time of such termination of the amount of fixed and additional rent and
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other charges equivalent to rent reserved in this Lease for the remainder of the
stated term of this Lease, all of which amount shall be immediately due and
payable by Tenant to Landlord, subject, however, to Landlord's duty to mitigate
damages.
In the event that a lawsuit is brought by Landlord for recovery of
possession of the Premises, for recovery of rent or any other amount due under
the provisions of this Lease or because of the breach of any other covenant
herein contained on the part of Tenant to be kept and performed, and a breach
shall be established, Tenant shall pay to Landlord all expenses incurred
therefor, including reasonable attorneys' fees.
(c) Default by Landlord. In the event of the failure of Landlord to
perform any obligation of Landlord to be performed by Landlord hereunder, and if
such default continues for a period of more than thirty (30) days after
Landlord's receipt of notice thereof in writing from Tenant, then Tenant may
elect to perform such obligation itself and the reasonable cost incurred by
Tenant is performing such obligation shall be due and payable within seven (7)
days of the receipt of an invoice for the same by Landlord, and if not paid when
due shall bear interest at the Default Rate. Provided, however, that if the
cause for giving such notice involves the making of repairs or other matters
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reasonably requiring a longer period of time than such thirty (30) day period,
Landlord shall be deemed to have complied with such notice within said period of
time if Tenant is diligently prosecuting compliance with said notice.
ARTICLE 16. LANDLORD'S WARRANTY. Landlord warrants and covenants that
it is lawfully in possession of the Premises and has good right and authority to
lease the same and that upon Tenant's paying the rents and performing the
covenants as herein provided it shall and may peaceably and quietly have, hold
and enjoy the Premises for the term or terms herein provided and Landlord will
defend such holding and enjoyment.
ARTICLE 17. SUCCESSORS AND ASSIGNS. The covenants and agreements
contained in this Lease shall apply to, inure to the benefit of and be binding
upon the Landlord and Tenant and upon their respective successors in interest
and assigns.
ARTICLE 18. WAIVER. Any failure or neglect by either party to assert or
enforce any rights or remedies because of any breach or default by the others
hereunder shall not prejudice or affect their respective rights or remedies with
respect to any subsequent breach or default.
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ARTICLE 19. INSURANCE.
(a) Landlord's Insurance. Subject to the provisions of Article 22
hereof, Landlord shall at all times during the term or any extension of this
Lease, carry fire and extended coverage insurance on the Building in an amount
equal to the full replacement value of the Building. Landlord shall comply with
any co-insurance clause in said insurance policy or policies. Tenant shall not
be liable for Landlord's failure to comply with any such co-insurance clause.
Tenant shall not be responsible for any deductible portion of Landlord's fire
and extended coverage insurance policies. Landlord shall provide Tenant with a
certificate that such insurance is in effect and renewal certificates as
necessary within fifteen (15) days after written request by Tenant.
(b) Tenant's Insurance. Tenant agrees that, at its own cost and
expense, it shall procure and continue in force, general liability insurance
insuring Tenant against any and all claims for injuries to persons or damage to
property occurring in or upon the Premises or occurring on the Project, and
including all damage to signs, fixtures or other appurtenances now or hereafter
erected upon the Premises or the Project, during the term of this Lease. Such
insurance shall at all times be in an amount not less than Two Million Dollars
($2,000,000.00) on account of bodily injury to or death of one person, and Two
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Million Dollars ($2,000,000.00) on account of bodily injuries to or death of
more than one person as a result of any one accident or disaster, and Five
Hundred Thousand Dollars ($500,000.00) for property damage in any one accident.
Such insurance shall be written by a company or companies authorized to engage
in the business of general liability insurance in the State of Ohio, and a
certificate of all such policies procured by Tenant in compliance herewith shall
be delivered to Landlord at least fifteen (15) days prior to the time such
insurance is required to be carried by Tenant, and, thereafter, at least fifteen
(15) days prior to the expiration of any such policies. Such policy shall bear
an endorsement stating that the insurer agrees to notify Landlord not less than
ten (10) days in advance of the modification or cancellation of any such policy.
In the event that Tenant fails to maintain such liability insurance, Landlord
shall have the right to obtain liability insurance on behalf of Tenant, insuring
Tenant and containing such limits, and to charge the cost thereof to Tenant
together with interest at the Default Rate until paid. Such right to obtain
liability insurance on behalf of Tenant shall not be deemed to be a waiver of
any other rights which Landlord may have under the provisions of this Lease or
as provided by law.
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Landlord shall obtain and pay the expense of whatever liability
insurance coverage it determines to be necessary in order to protect its own
interest.
Tenant further agrees to maintain in full force throughout the term of
this Lease policies of fire insurance, including extended coverage, on all trade
fixtures, furniture, furnishings, equipment and other personal property of
Tenant located in the Premises. Tenant shall provide Landlord with a certificate
that such insurance is in effect and renewal certificates as necessary.
ARTICLE 20. COMMON AREAS. Landlord agrees that Tenant, and Tenant's
clients, employees, agents, visitors and invitees, shall have the right
throughout the term of this Lease to use, in common with others entitled to
similar use thereof, all of the areas of the Project that may from time to time
be constructed and designated as common areas by Landlord, including but not
limited to parking areas, sidewalks and driveways for ingress and egress to the
Project; provided, however, that Tenant, Tenant's clients, employees, agents,
visitors and invitees shall not use any parking areas reserved and designated
for the exclusive use of Landlord or any other persons. "Common Areas" shall
include the Loading Dock and Turn Around Area.
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The common areas shall at all times be subject to the exclusive
management and control of Landlord, and Landlord shall have the right, from time
to time, to establish, modify and enforce reasonable rules and regulations with
respect to all such common areas if the same are, in Landlord's reasonable
opinion, for the betterment or safety of the Project, and the use of such common
areas by Tenant shall be subject to such rules and regulations. If an amendment
or modification of such rules and regulations would adversely affect the rights
of Tenant under this Lease, such modification shall require the consent of
Tenant, which consent shall not be unreasonably withheld or delayed. Landlord
shall notify Tenant of any modification or amendment to such rules and
regulations at least thirty (30) days before it becomes effective.
Landlord may do and perform such acts in and to said common areas as,
in Landlord's good business judgment, Landlord shall determine to be advisable.
Landlord hereby reserves the right to make alterations, additions, deletions or
changes including, but not limited to, changes in size and configuration of said
common areas, with the consent of Tenant, which consent shall not be
unreasonably withheld or delayed.
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Subject to the provisions of Article 22 hereof, Landlord shall arrange
and adequately maintain the common areas in a good usable condition throughout
the term of this Lease.
ARTICLE 21. NET LEASE. It is the purpose and intent of Landlord and
Tenant that except for Landlord's obligations hereunder for roof and structural
replacement, the annual fixed rent payable by Tenant hereunder shall be
absolutely net to Landlord so that this Lease shall yield, net, to Landlord the
rent specified in Article 3 or Article 4, as the case may be, and that all
costs, expenses or obligations of every kind and nature whatsoever which are
expressed as Tenant's responsibility or for which Tenant has agreed herein to
pay additional rent shall, subject to the provisions of Article 22 hereof, be
paid by Tenant. Tenant hereby agrees to and shall indemnify and save Landlord
harmless from and against all such costs, expenses and obligations.
ARTICLE 22. OPERATING EXPENSES.
(a) Tenant's Proportionate Share of Landlord's Operating Expense.
Tenant shall pay to Landlord, as additional rent, an amount equal to Tenant's
proportionate share ("Tenant's Operating Expense Allocation") of the cost and
expense to Landlord ("Landlord's Operating Expense") of Landlord's Operating
Services, as hereinafter defined, for the Project.
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(b) Statement of Landlord's Operating Expense and Payment. Tenant shall
pay to Landlord monthly installments in advance on the first day of each
calendar month during the term of this Lease an amount equal to one-twelfth
(1/12th) of Tenant's annual Operating Expense Allocation, as said amount is
estimated from time to time by Landlord. Within thirty (30) days after the end
of each calendar year of the term of this Lease, or any renewal term thereof,
Landlord shall furnish to Tenant a statement of the actual amount of Tenant's
proportionate share of Landlord's Operating Expense incurred by Landlord for
Landlord's Operating Services during the preceding calendar year. In the event
that Tenant's proportionate share of Landlord's Operating Expense for such
calendar year exceeds the payments made by Tenant to Landlord pursuant to this
Article 22(b) during such calendar year, Tenant shall, within twenty (20) days
after Landlord has furnished such statement, pay to Landlord the amount of such
excess. In the event the amount of such excess is not paid within twenty (20)
days after Landlord has furnished such statement, such excess shall bear
interest at the Default Rate commencing with the twentieth (20th) day after
Landlord has furnished such statement until such excess is paid by Tenant. In
the event that Tenant shall have paid to Landlord during such calendar year an
amount for Landlord's Operating Expense which exceeds the amount due from Tenant
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to Landlord for such calendar year, the amount of such overpayment shall be
credited against the next payment which shall become due from Tenant to Landlord
for Landlord's Operating Expense.
(c) Landlord's Operating Expense Items. As used herein, the term
"Landlord's Operating Expense" shall include all costs and expenses of any kind
or nature incurred by Landlord in managing, operating, equipping, policing,
protecting, lighting, insuring, repairing, replacing and maintaining the
Project, including all common areas, roof and structural maintenance (but not
roof and structural replacement), in accordance with accepted principles of
sound operation and management, including but not limited to all costs and
expenses incurred pursuant to Article 5, 19, 20 and 21 hereof, and the costs and
expenses of management, security programs, including but not limited to security
and life safety systems, illumination and maintenance of common signs, cleaning,
lighting, snow removal, landscaping, premiums for liability, property and rent
loss insurance, personal property taxes, supplies, the cost of maintaining and
replacement of equipment, reasonable depreciation of maintenance equipment used
in the operation and maintenance of the Project, total compensation and benefits
(including premiums for workers' compensation and other insurance) paid to or on
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behalf of the employees involved in the performance of the work specified in
this Article 22(c), and an amount equal to twenty-nine and one-quarter percent
(29.25%) of the expenses incurred by Landlord in sealing, repairing, striping,
cleaning, and removing snow from the driveways and the common loading dock
turn-around area which serves the Building and the adjacent building in ACP.
(d) Computation of Proportionate Share. Tenant's proportionate share of
Landlord's Operating Expense shall be fifty-eight and one-half percent (58.5%)
of Landlord's Operating Expense.
(e) Review of Records. Tenant shall have the right, within thirty (30)
days after Landlord has rendered its annual statement of Landlord's Operating
Expenses for any calendar year during the term of this Lease, or any extension
thereof, to review Landlord's records relating to Landlord's Operating Expenses
at the office where such records are kept and during Landlord's regular business
hours. Such right shall be exercised within such period and upon fourteen (14)
days' prior written notice given by Tenant to Landlord.
ARTICLE 23. MAINTENANCE AND REPAIRS. Tenant will maintain the interior
of the Premises and all windows and doors in good condition and repair in
accordance with maintenance standards employed in maintenance of comparable
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buildings in Franklin County, Ohio. Maintenance procedures will be subject to
Landlord's approval. In the event that Landlord reasonably determines that
Tenant is not adequately maintaining the Premises, Landlord shall have the
right, upon not less than forty-five (45) days written notice to Tenant
specifying the reasons for such conclusion, and if Tenant has not corrected all
identified problems within such forty-five (45) day period, to perform such
maintenance on behalf of Tenant and to charge Tenant, as additional rent, the
reasonable costs thereof.
Without limitation, Tenant's obligations hereunder shall include
ordinary and extraordinary repairs to keep the interior, windows and doors of
the Premises, and all heating, air conditioning, plumbing and electrical systems
and all fixtures and equipment in good order and repair.
Subject to the provisions of Article 22 hereof, Landlord shall be
responsible for maintaining the exterior, roof and structure of the Building.
Landlord shall be responsible at its sole cost and not subject to the provisions
of Article 22 hereof for replacement, as distinguished from repair and
maintenance, of the roof and structure of the Building.
ARTICLE 24. RULES AND REGULATIONS FOR THE PROJECT. Tenant agrees to
comply with and observe all rules and regulations as set forth in Exhibit C
attached hereto and made a part hereof, and as modified and established by
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Landlord from time to time with respect to the operation and use of the Project
and the Premises in accordance with the provisions of Article 20 hereof.
Tenant's failure to keep and observe said rules and regulations shall constitute
a breach of the terms of this Lease in the manner defined as an Event of Default
hereunder.
ARTICLE 25. ENVIRONMENTAL PROTECTION; COMPLIANCE WITH CODE. Tenant
acknowledges that there are in effect federal, state and local laws and
regulations and that additional laws and regulations may hereinafter be enacted
to go into effect relating to or affecting the Premises and the Project, and
concerning the impact on the environment of construction, land use, maintenance
and operation of structures, and the conduct of business. Tenant will not cause
or permit to be caused any act or practice, by negligence, omission, or
otherwise, that would violate any of said laws or regulations.
Landlord acknowledges that as of the date of execution of this Lease it
has no knowledge of and has not received any notice of intent to commence any
action or proceeding against Landlord or the Premises or Project based on any
violation of any building, fire, safety, zoning, land use or environmental law,
regulation or ordinance of any applicable jurisdiction in any respect which
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might adversely affect the Premises or Project or require any modifications to
the Building.
It is the intent of the parties that Landlord shall be responsible for
the cost of environmental compliance resulting from any existing condition on
the Premises as of the date that Tenant first enters the Premises to commence
Tenant's Work (the "Work commencement Date") and that Tenant shall be
responsible for the cost of any environmental compliance resulting from any
condition or event on the Premises arising after the Work Commencement Date
unless the same is solely the result of the negligence of Landlord. Therefore,
Landlord agrees to indemnify and hold harmless Tenant from any and all claims,
liability, loss, damage costs and expenses arising under any applicable
environmental laws or regulations and conditions existing on the Premises prior
to the Work Commencement Date, except to the extent the same were caused by
Tenant. Tenant agrees to indemnify and hold harmless Landlord from any and all
claims, liability, loss, damage, costs and expenses arising under any applicable
environmental laws or regulations and conditions or events arising after the
Work commencement Date or prior to the Work Commencement Date if caused by
Tenant.
In the event that any use of the Building by Tenant different from the
office/warehouse use for which the Building was designed necessitates any
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modifications to the Building or other actions in order to cause the Building to
comply with applicable land use, zoning, building, fire, safety and
environmental codes of governmental authority having jurisdiction, Tenant will
pay the cost of such modifications and indemnify and save Landlord harmless from
all liability and expense in connection therewith. Any other modifications to
the Building or any other actions required by a change in applicable land use,
zoning, building, fire, safety and environmental codes after the completion of
Tenant's Work will be made by Landlord at Landlord's expense.
ARTICLE 26. REDUCTION OR CURTAILMENT DUE TO ENERGY SHORTAGE. Landlord
and Tenant specifically acknowledge that energy shortages in the region in which
the Project is located may from time to time necessitate reduced or curtailed
operation of the Project and the business conducted by Tenant in the Premises.
Tenant agrees to and shall comply with all such rules and regulations as may be
promulgated from time to time by any governmental authority having jurisdiction
with respect to energy consumption and Tenant shall reduce or curtail operations
in the Premises as shall be directed by such governmental authority. Compliance
with such rules and regulations and/or such reduction or curtailment of
operation shall not constitute a breach of Landlord's covenant of quiet
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enjoyment or otherwise invalidate or affect this Lease, and Tenant shall not be
entitled to any diminution or abatement in rent during periods of reduction or
curtailment of operations, subject, however, to Tenant's right to terminate this
Lease in the event of circumstances constituting a constructive eviction if
reduction or curtailment is for a prolonged period. Failure to keep and observe
said rules and regulations and/or to reduce or curtail business operations as
herein provided shall constitute a breach of the terms of this Lease.
ARTICLE 27. OFFSET STATEMENT. Tenant agrees that, within ten (10)
business days after receipt of a written request therefor by Landlord, to
execute in recordable form and deliver to Landlord a statement, in writing,
stating: (a) that this Lease is in full force and effect, (b) the date of
commencement of the term of this Lease, (c) that rent is paid currently without
any offset or defense thereto, (d) the amount of rent, if any, paid in advance,
and (e) that there are no uncured defaults by Landlord, or stating those
defaults of Landlord claimed by Tenant, provided that, if any such defaults are
claimed, such facts are accurate and ascertainable.
ARTICLE 28. ATTORNMENT. Tenant shall, in the event any proceedings are
brought for foreclosure of any mortgage made by Landlord covering the Premises
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or the Project, attorn to the purchaser upon any such foreclosure or sale and
recognize such purchaser as Landlord under this Lease.
ARTICLE 29. SUBORDINATION. Tenant agrees that this Lease shall, at the
request of Landlord, be subordinate to any mortgage that now exists or may
hereafter be placed on the Project or the Premises and to any and all advances
to be made thereunder, and to the interest thereon, and all renewals,
replacements and extensions thereof; provided that the mortgagees named in said
mortgages shall agree to recognize this Lease in the event of foreclosure if
Tenant is not then in default which default has continued beyond the expiration
of the applicable notice and cure period and has become an Event of Default.
Tenant also agrees that any mortgagee may elect to have this Lease a prior lien
to its mortgage and, in the event of such election and upon notification by such
mortgagee to Tenant to that effect, this Lease shall be deemed prior in lien to
said mortgage. Tenant agrees that, upon the request by Landlord or any
mortgagee, it shall execute whatever instruments may be reasonably required to
carry out the intent of this Article 29 and which do not add to the intent of
this Article 29. Such instruments must be in form and substance reasonably
satisfactory to Tenant and Tenant's counsel. Failure of Tenant to execute any of
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the instruments provided for in Articles 27 or 28 or this Article 29 within
thirty (30) days after receipt of written request to do so by Landlord (unless
due to a reasonable request by Tenant for modification to such instruments)
shall constitute a breach of this Lease, and Landlord may, at its option, cancel
this Lease and terminate Tenant's interest herein.
ARTICLE 30. EMINENT DOMAIN - TAKING OF PREMISES. In the event that the
whole of the Project or the whole or part of the Premises or (except as provided
below) the common area serving the Premises is taken under the power of eminent
domain by any public authority, this Lease shall terminate and expire as of the
date possession is taken by the public authority and Tenant shall pay rent up to
the date of such taking with an appropriate refund by Landlord of such amounts
thereof as shall have been paid in advance for a period subsequent to the date
of the taking. If less than the whole of the Project shall be so taken and the
portion of the Project taken does not involve any part of the Premises or the
common loading dock area serving the Premises and if access is maintained over
at least one of the two common driveways, then this Lease shall continue in
effect. In the event of a termination, Tenant shall pay rent up to the date of
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such taking with an appropriate refund by Landlord of such amounts thereof as
may have been paid in advance for a period subsequent to the date of the taking.
In the event the Premises or the Project, or any part thereof, shall be
taken or condemned either permanently or temporarily for any public or
quasi-public use or purpose by competent authority in appropriation proceedings
or by any right of eminent domain, the entire compensation award therefor,
including, but not limited to, all damages as compensation for diminution in
value of the leasehold, reversion or fee, shall belong to Landlord without any
deductions therefrom for any present or future estate of Tenant, and Tenant
hereby assigns to Landlord all its right, title and interest to any such award.
Although all damages in the event of any condemnation are to belong to Landlord,
whether such damages are awarded as compensation for diminution in value of the
leasehold, reversion or fee of the Premises, Tenant shall, in the event that
this Lease is terminated by reason thereof, have the right to claim and recover
from the condemning authority, but not from Landlord, such compensation as may
be separately awarded or recoverable by Tenant in Tenant's own right on account
of any and all damage to Tenant's business by reason of the condemnation and for
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or on account of any cost or loss which Tenant might incur in removing Tenant's
merchandise, furniture, fixtures, leasehold improvements and equipment.
ARTICLE 31. TENANT'S PROPERTY. Tenant shall be responsible for and
shall pay before delinquency all municipal, county, state and federal taxes
assessed during the term of this Lease against any leasehold interest or
personal property of any kind, owned by or placed in, upon or about the Premises
by Tenant.
Tenant shall hold Landlord harmless from and indemnify Landlord against
any and all claims or liability for any injury or damage to any person or
property in or upon the Premises excepting any injury or damage arising from
Landlord's negligence. Landlord shall be liable for all claims of loss, injury
or damage occurring in or upon the common areas, including the grounds of the
Building and the parking lot, unless caused by the negligence of Tenant.
Landlord shall not be responsible for the flooding of subsurface areas and
damage caused by refrigerators, sprinkling devices, air conditioning apparatus,
water, snow, frost, steam, excessive heat or cold, falling plaster, or broken
fixtures, unless such damage results from the act or neglect of Landlord, and
whether such damage be caused or results from any thing or circumstance above
mentioned or referred to, or any other thing or circumstance of a like nature.
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If any such damage, whether to the Premises, the Building or the Project or any
part thereof, or whether to Landlord or to other tenants in the Project, results
from any act or neglect of Tenant, Landlord may, at Landlord's option, repair
such damage and Tenant shall, upon demand by Landlord, reimburse Landlord
forthwith for the total cost of such repairs. Tenant shall not be liable for any
damages caused by its act or neglect if Landlord or any other tenant of the
Project has recovered the full amount of damages from insurance, and the
insurance company has waived in writing its rights of subrogation against
Tenant.
ARTICLE 32. LIABILITY OF LANDLORD. Tenant hereby recognizes that
Landlord is a partnership. It is expressly understood and agreed by and between
the parties hereto, anything herein to the contrary notwithstanding, that each
and all of the representations, covenants, undertakings and agreements herein
made on the part of Landlord are intended not as personal representations,
covenants, undertakings and agreements of the partners of Landlord, but are made
and intended for the purpose of binding only that portion of Landlord's property
leased here-under. No personal liability or personal responsibility is assumed
by, nor shall at any time be asserted or enforced against, any of the partners
of Landlord on account of this Lease or on account of any covenant, undertaking
or agreement in this Lease contained (either expressed or implied), all such
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personal liability, if any, being expressly waived and released by Tenant
herein, and by all persons claiming by, through or under Tenant. If Landlord
shall fail to perform any covenant, term or condition of this Lease on
Landlord's part to be performed, and if as a consequence of such default Tenant
shall recover a money judgment against Landlord, such judgment shall be
satisfied only out of the proceeds of sale received upon execution of such
judgment and levied thereon against the right, title and interest of Landlord in
the Project, and neither Landlord nor its partners nor any other person or
interest or entity owning any interest in or affiliated with Landlord shall be
liable for any deficiency.
ARTICLE 33. SECURITY DEPOSIT. There shall be no Security Deposit in
connection with this Lease.
ARTICLE 34. NAME OF PROJECT. The name of the Project is Americana
Commerce Park. Such name shall not be changed without the consent of Tenant,
which consent shall not be unreasonably withheld or delayed.
ARTICLE 35. COMMISSIONS AND FEES. Landlord and Tenant each represent
that they have dealt with no real estate brokers or agents in connection with
this Lease except Kohr, Royer, Griffith, Inc. In reliance upon the foregoing,
Landlord and Tenant agree to share equally in the payment of a brokerage
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commission to Kohr, Royer, Griffith, Inc. in the amount of three percent (3%) of
the net rentals to be paid by Tenant during the original term of this Lease
under Article 3(a) hereof. Said commission shall be paid one-half upon the
execution of this Lease by Landlord and Tenant, and one-half upon Tenant's
acceptance and occupancy of the Premises. Tenant agrees to indemnify and hold
harmless Landlord from all other claims for brokerage commissions and fees based
upon this Lease.
ARTICLE 36. ENTIRE AGREEMENT. This Lease and any exhibits, addenda or
riders attached hereto and forming a part hereof, set forth all the covenants,
promises, agreements, conditions and understandings between Landlord and Tenant
concerning the Premises and there are no promises, agreements, conditions or
understandings, either oral or written, between them other than are herein set
forth. No alteration, amendment, change or addition to this Lease shall be
binding upon Landlord or Tenant unless reduced to writing and signed by the
parties hereto.
ARTICLE 37. DELAYS. In the event that either party hereto shall be
delayed or hindered in or prevented from the performance of any act required
hereunder by reason of strikes, lockouts, labor troubles, inability to procure
materials, failure of power, restrictive governmental laws or regulations,
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riots, insurrection, war or other reason of a like nature not the fault of the
party delayed in performing work or doing acts required under the terms of this
Lease, then performance of such act shall be excused for the period equivalent
to the period of such delay. The provisions of this Article 34 shall not operate
to excuse Tenant from prompt payment of rent or any other payments required by
the terms of this Lease.
ARTICLE 38. NOTICES. Any notice, demand, request or other instrument
which may be or is required to be given under this Lease shall be sent by United
States certified mail, return receipt requested, postage prepaid, and shall be
addressed to Landlord at c/o Oakwood Management Company, 6950 Americana Parkway,
Reynoldsburg, Ohio 43068, and to Tenant at 6954 Americana Parkway, Reynoldsburg,
Ohio 43068, or such other addresses as Landlord or Tenant shall designate by
written notice to the other party. Notice shall be effective upon receipt.
ARTICLE 39. RECORDING. Tenant shall not record this Lease without the
prior written consent of Landlord; provided, however, upon the request of either
party hereto, the other party shall join in the execution of a memorandum or
so-called "short form" of this Lease for the purposes of recordation. Said
memorandum or "short form" of this Lease shall contain the names of Landlord and
Tenant and their addresses as set forth in this Lease, a reference to this Lease
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with its date of execution, a description of the Premises, including a reference
by volume and page to the record of the deed under which Landlord claims title,
and the term of this Lease, together with the rights of renewal or extensions
thereof.
ARTICLE 40. TRANSFER OF LANDLORD'S INTEREST. In the event of any
transfer or transfers of Landlord's interest in the Premises, the transferor
shall automatically be relieved of any and all obligations and liabilities on
the part of Landlord accruing from and after the date of such transfer.
ARTICLE 41. APPROVAL AND AUTHORIZATION. At the time of execution and
delivery of this Lease by Tenant, Tenant shall deliver to Landlord a certified
resolution of its board of directors evidencing the previous approval of this
Lease by Tenant and the authority of the officers of Tenant who execute and
deliver this Lease on behalf of Tenant.
ARTICLE 42. ACCORD AND SATISFACTION. No payment by Tenant or receipt by
Landlord of a lesser amount than the monthly rent herein stipulated to be paid
by Tenant to Landlord or any endorsement or statement on any check or any letter
accompanying any check or payment as rent shall be deemed an accord and
satisfaction, and Landlord shall accept such check or payment without prejudice
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to Landlord's right to recover the balance of such rent or pursue any other
remedy provided in this Lease.
ARTICLE 43. RIGHT OF FIRST REFUSAL. In the event space in the Building
immediately contiguous to the Premises (the "Contiguous Space") becomes vacant
and not subject to an existing lease, Landlord shall not lease such Contiguous
Space to any party other than Tenant without first offering the space to Tenant
under the following terms and conditions:
(a) In the event Landlord receives a bona fide offer from a prospective
tenant (including an affiliate of Landlord) which it desires to accept, Landlord
shall notify Tenant ("Landlord's Notice") of the availability of the Contiguous
Space and the economic terms of such offer.
(b) Tenant shall have a period of five (5) business days after receipt of
such notice to notify Landlord ("Tenant's Notice") that it desires to lease all
of such Contiguous Space upon such terms or such other terms as Landlord and
Tenant may agree.
(c) If Tenant so notifies Landlord that it desires to lease such Contiguous
Space, Landlord and Tenant shall promptly amend this Lease to add such
additional space, modify the rent, and include any tenant finish allowance
provisions thereto. All other terms shall be the same as in this Lease.
Provided, however, that if an amendment to this Lease has not been
44
<PAGE> 45
executed within thirty (30) days after the date of Tenant's Notice, Tenant shall
nonetheless be obligated to pay the additional rent and common area charges
relative to such Contiguous Space.
(d) If Tenant does not notify Landlord of its election to lease the
Contiguous Space by Tenant's Notice within five (5) business days after receipt
of Landlord's Notice or notify Landlord within such period that it does not
elect to lease the Contiguous Space, Tenant shall be deemed to have waived its
right under this Article 43 to lease the Contiguous Space, and Landlord shall
have the right to enter into a lease with any other party for all or a portion
of the Contiguous Space on terms no less favorable to the Tenant than those
contained in Landlord's Notice at any time. If Landlord desires to lease the
Contiguous Space to a third party on terms more favorable to the prospective
tenant than those contained in the Landlord's Notice, it must first offer to
lease the same to Tenant by means of a new Landlord's Notice, and Tenant shall
thereafter have a five (5) business day period to elect to lease the Contiguous
Space on those terms by sending a Tenant's Notice as set forth herein under the
same conditions set forth in this Article.
45
<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have executed this Addendum as
of the date of execution of the printed Lease to which it is attached.
Signed and acknowledged LANDLORD:
in the presence of:
AMERICANA INVESTMENT COMPANY
/s/ Sally J. McGinty By /s/ Donald W. Kelley
- ------------------------------------ -----------------------------------
/s/ John W. Royer Its Managing Partner
- ------------------------------------ -----------------------------------
TENANT:
LEXFORD, INC.
/s/ John W. Royer By /s/ Thomas R. Russell
- ------------------------------------ -----------------------------------
/s/ David Kerscher Its Comptroller
- ------------------------------------ -----------------------------------
46
<PAGE> 47
STATE OF OHIO )
) ss:
COUNTY OF FRANKLIN )
The foregoing instrument was acknowledged before me this 25th day of
February, 1998, by Donald W. Kelley, authorized partners of Americana Investment
Company, an Ohio general partnership, on behalf of the partnership.
/s/ Sally J. McGinty
---------------------
Notary Public
STATE OF OHIO )
) ss:
COUNTY OF FRANKLIN )
The foregoing instrument was acknowledged before me this 24th day of
February, 1998, by Thomas R. Russell, of Lexford, Inc., an Ohio corporation, on
behalf of the corporation.
/s/ Jamie Rustemeyer
--------------------
Notary Public
47
<PAGE> 1
MASTER EQUIPMENT LEASE
Alliance Leasing & Services Group, Ltd. ("ALSG") and the Lessee stated above
("Customer"), in consideration of the mutual agreements set forth herein and in
any schedule or schedules hereto and the payment of rent as provided herein and
therein, hereby agree to the terms of this Master Equipment Lease and any
schedule or schedules hereto.
1. EQUIPMENT LEASED: This contract is a Master Equipment Lease and the terms of
each schedule ("Schedule") hereto are subject to any and all conditions and
provisions set forth herein as they may from time to time be amended. Each
Schedule shall incorporate therein all of the terms and conditions of this
Master Equipment Lease and shall contain such additional terms and conditions as
ALSG and Customer shall agree upon. Each Schedule is enforceable according to
the terms and conditions contained therein. In the event of a conflict between
the language of this Master Equipment Lease and any Schedule hereto, the terms
of the Schedule shall prevail with respect to that Schedule. This Master
Equipment Lease and all Schedules hereto are collectively referred to as the
"Agreement."
ALSG agrees to lease to Customer, and Customer agrees to lease from ALSG, in
accordance with the terms and conditions herein, the equipment and features,
together with all replacements, parts, repairs, additions, attachments and
accessories incorporated therein (collectively called the "Machines") described
in each executed Schedule which shall be made a part hereof. Customer shall have
no right, title or interest in the Machines, except as expressly set forth in
this Agreement. ALSG shall have no obligation hereunder until the execution and
delivery of a Schedule by ALSG and Customer.
2. TERM AND RENT: The term of this Agreement shall commence on the date set
forth above and shall continue thereafter so long as any Schedule entered into
pursuant to this Agreement remains in effect.
The Initial Term and the rent payable with respect to each Machine shall be as
set forth in the Schedule relating thereto. The term of any lease of Machines
hereunder shall commence on the Commencement Date specified in the Schedule
relating to such Machines and shall continue in force until terminated by ALSG
or Customer upon not less than one hundred eighty (180) days' written notice,
provided, however, that no such lease shall be so terminated prior to the
expiration of the Initial Term Specified in such Schedule.
The periodic rental charge for Machines listed in each Schedule shall commence
on the Commencement Date, specified in such Schedule, and be due and payable in
advance on the first day of each month, in the case of monthly rent, and
quarter, in the case of quarterly rent (except in each case the first payment
which shall be a pro rata portion of the periodic rental charge calculated on
the basis of thirty-day months, and shall be due and payable when invoiced by
ALSG.)
Except as otherwise hereinafter expressly provided, the ALSG periodic rental
charges for all the Machines listed in each Schedule during the Initial Term
shall be the charges set forth in the Schedule relating thereto.
After expiration of the Initial Term specified in a Schedule and so long
thereafter as this Agreement shall remain in effect, the periodic rental charge
for the Machines set forth in such Schedule shall be the aggregate periodic
rental charges for such Machines in effect with respect to the last month or
quarter of the Initial Term relating thereto.
3. LATE CHARGES: At its discretion, ALSG shall have the right to charge and
collect, and Customer agrees to pay, late charges for rental and other amounts
due hereunder not paid when due, said late charges to be charged at the rate of
one and one half percent per month on the unpaid installment or the highest
amount permitted by applicable law whichever is lower. These charges will be
billed in the following period and like the rental will be due the first day of
the month or quarter. No notice of default shall be required to be given to
Customer as a condition to Customer's becoming obligated to pay late charges.
4. PAYMENT OF TAXES: Customer convenants and agrees to pay, upon invoice by
ALSG, and to reimburse and indemnify and hold ALSG harmless from and against,
all taxes, fees or other charges, however designated or levied, on the Customer,
on this Agreement, on the Machines or their use or value for tax purposes,
including (but not limited to) state and local privilege or excise taxes based
on gross revenue and any taxes or amounts in addition thereto or in lieu thereof
paid or payable by ALSG, except any taxes based upon the net income of ALSG.
5. SECURITY INTEREST: At or prior to the Commencement Date of any lease of
Machines hereunder, and from time to time as ALSG shall request, Customer, at
its own expense, shall cause financing statements with respect to this Agreement
to be executed by a duly authorized representative of Customer and ALSG and
filed in the Office of the Secretary of State and County Recorder of the
appropriate jurisdiction as may be required to create a perfected security
interest in the Machines. The Customer shall, at its expense, from time to time
do and perform any other act and will execute, deliver, file and record (and
will re-file, re-record, whenever required) any and all further instruments
required by law or reasonably requested by ALSG, its successors or assigns, for
the protection of the title of ALSG, its successors or assigns to the Machines,
or for the purpose of carrying out the intent of the Agreement.
6. LIENS: Customer shall not directly or indirectly create, incur, assume or
suffer to exist any mortgage, security interest, pledge, charge, lien,
encumbrance or claim on or with respect to the Machines, title thereto or any
interest therein, except (a) the respective rights of ALSG and Customer as
herein provided, (b) liens or encumbrances which result from any action or
inaction of ALSG or from any claim against ALSG (other than any such liens or
encumbrances which arise from Customer's failure to perform any obligation of
Customer hereunder), (c) liens for taxes either not yet due or being contested
in the opinion of ALSG in good faith and by appropriate proceedings and (d)
inchoate materialmen's, mechanics', workmen's, repairmen's, employees' or other
like liens arising in the ordinary course of business and not delinquent.
Customer will immediately notify ALSG of, and Customer will immediately at its
own cost and expense take whatever action is necessary to duly discharge, any
such mortgage, security interest, pledge, charge, lien, encumbrance or claim not
excepted in (b), (c) and (d) above, when the same may arise at any time, until
the return of the Machines as provided hereunder.
7. MAINTENANCE: Customer at its sole expense shall maintain the Machines in good
operating order, repair, condition and appearance and protect the Machines from
deterioration, other than normal wear and tear. Customer at its sole expense
shall enter into, and maintain in force in accordance with the terms thereof, a
Maintenance Agreement covering the Machines with ALSG, the manufacturer of the
Machines, or such other party as shall be acceptable to ALSG (the "Maintenance
Vendor") (effective date to be the Commencement Date of this Agreement), and
Customer shall supply an executed copy thereof to ALSG and authorize the
Maintenance Vendor to notify ALSG in the event maintenance charges are not paid
by Customer when due. In such event, ALSG shall have the right, but not the
obligation, to pay all such charges and treat such amounts as additional rental
hereunder Customer will cause the Maintenance Vendor to keep the Machines in
good working order in accordance with the provisions of said Maintenance
Agreement. All maintenance and service charges, whether under said Maintenance
Agreement or otherwise, and in addition the expenses, if any, of the Maintenance
Vendor's customer engineers charged by such Vendor in connection with
maintenance and repair services, shall be borne by Customer. The Equipment
returned to Lessor shall, at the time it is removed from Lessee's premises, be
in the same condition and working order as when delivered to Lessee, reasonable
wear and tear excepted, and certified for manufacturer's maintenance by its
manufacturer. Customer hereby assumes and agrees to pay any costs necessary to
have the manufacturer certify the machines.
Upon the request of ALSG, Customer shall at reasonable times during business
hours make the Machines and its maintenance records available for inspections.
8. USE: Customer shall provide safe storage and proper care for the Machines and
shall at all times use, operate and enjoy the same strictly in accordance with
all laws, ordinances and regulations from time to time in force. Cards, tapes,
other supplies, accessories and disk devices used to operate the Machines shall
meet applicable specifications of the respective Machine manufacturer(s).
9. ALTERATION AND ATTACHMENTS: Customer may, at its own expense and after prior
written notice to ALSG, make alterations in or attachments to the Machines,
provided that such alterations and attachments consist only of (i) any
accessory, equipment or device manufactured or sold by the manufacturer of the
Machines for installation on the Machines and installed in compliance with said
manufacturer's installation procedures, or (ii) any other accessory, equipment
or device installed on the Machines so long a such item does not interfere with
the normal operation of the Machines, increase the cost of maintenance of the
Machines, or create a safety hazard, and is capable of being removed without
causing damage to the Machines. Any alteration or attachment proposed by
Customer for the Machines shall, at ALSG's option, be purchased or leased from
ALSG, subject to the then prevailing fair market value of such alteration or
attachment and, if applicable, the then prevailing market interest rate for
customers with like credit standing as Customer in similar transactions. All
such alterations and attachments, unless ALSG shall otherwise direct in writing,
shall be removed by Customer and the Machines restored to their original
condition, reasonable wear and tear excepted, upon termination of this
Agreement. Any unremoved alterations and attachments and replacements made to or
placed in or upon the Machines shall become a component part thereof and title
therein shall immediately vest in ALSG and shall be included under the terms and
provisions of this Agreement. Customer shall not, without the prior written
consent of ALSG and subject to such conditions as ALSG may impose for is
protection, affix the Machines to any real property if, as a result thereof, the
Machines will become a fixture under applicable law. Notwithstanding the above
provisions, the manufacturer of the Machines may incorporate engineering changes
or make temporary alterations to the machines without the consent of ALSG.
10. RISK OF LOSS: All risk of loss, theft, destruction and damage to the
Machines, from whatever cause, are assumed by Customer. Should the Machines be
damaged, customer shall repair the Machines to ALSG's satisfaction and after
making such repair Customer shall be entitled to reimbursement by ALSG to the
extent of insurance proceeds received by ALSG for such charges as customer has
incurred. Should the Machines be irreparably damaged, lost or destroyed,
Customer shall pay ALSG the value thereof, which shall be deemed to be the
Stipulated Loss Value for such Machines as listed on the Schedules relating
thereto, and after making such payment Customer shall be entitled to
reimbursement by ALSG to the extent of insurance proceeds received by ALSG.
Customer will maintain fire, with extended coverage, insurance for the term of
the Agreement on the Machines for the full value thereof, as specified above,
and will maintain public liability insurance with respect to the Machines with
minimum limits of liability per any one occurrence of not less than $250,000.
All such insurance shall name ALSG, its successors and assigns as additional
assureds or loss payees as their interest may appear, shall be with such
insurers as shall be satisfactory to ALSG and shall provide that the same may be
altered or cancelled only after ten (10) days' prior written notice to such
assureds and loss payees. If any loss shall be paid to Customer and ALSG
jointly, ALSG is hereby appointed Customer's attorney-in-fact for the purpose of
endorsing Customer's name on the check or draft constituting such payment.
Customer shall deliver to ALSG, promptly after the beginning of the term of the
Agreement or prior to the effective date of any cancellation or expiration of
such insurance, as the case may be, the insurance policy or a certificate of
other evidence, satisfactory to ALSG, of the maintenance of such insurance.
Customer agrees to give ALSG prompt notice of any damage to or loss of the
Machines or any part thereof, and to take such actions as required by this
paragraph within thirty (30) days of such damage or loss.
11. INDEMNITY: Customer agrees that it shall at all times defend, indemnify, and
hold ALSG, its successors and assigns, harmless from and against any and all
claims, costs, expenses, damages and liabilities (including, but not limited to,
liability for death, bodily injury and property damage), including reasonable
attorneys' fees, resulting from or pertaining to the purchase, ownership,
rental, use, operation or return of the Machines during or upon the expiration
of the initial or any extended term of this Agreement, except for any of the
foregoing that result from the sole negligence or willful misconduct of ALSG.
12. DISCLAIMER OF LIABILITY: CUSTOMER AGREES THAT ALSG SHALL NOT BE LIABLE TO
CUSTOMER FOR ANY CLAIM, LOSS, DAMAGE OR EXPENSE OF ANY KIND CAUSED, DIRECTLY OR
INDIRECTLY, BY THE INADEQUACY OF ANY MACHINE FOR ANY PURPOSE, ANY DEFICIENCY OR
DEFECT THEREIN OR ANY DELAY IN PROVIDING OR FAILURE TO PROVIDE ANY THEREOF, OR
ANY INTERRUPTION OR LOSS OF SERVICE OR USE THEREOF, OR ANY LOSS OF BUSINESS AND
AGREES THAT IT WILL, IRRESPECTIVE OF ANY SUCH CLAIM, LOSS, DAMAGE OR EXPENSE,
CONTINUE TO PAY ALL PERIODIC RENTAL CHARGES IN THE AMOUNTS STATED HEREIN WHICH
MAY COME DUE DURING THE INITIAL TERM HEREOF AND THEREAFTER SO LONG AS THIS
AGREEMENT IS NOT TERMINATED IN ACCORDANCE WITH ITS TERM. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, IT IS EXPRESSLY UNDERSTOOD THAT ALSG MAKES NO
WARRANTIES, STATUTORY, EXPRESS OR IMPLIED, WITH RESPECT TO THE MERCHANTABILITY,
FITNESS, CONDITION, QUALITY, CAPACITY OR DURABILITY OF THE MACHINES OR ANY PART
THEREOF. THERE IS NO WARRANTY THAT THE MACHINES WILL BE FIT FOR A PARTICULAR
PURPOSE. ALSG SHALL NOT BE OBLIGATED TO PROVIDE REPLACEMENT FOR ANY OF THE
MACHINES WHICH MAY BE DESTROYED BY FIRE, THEFT, OR OTHER CASUALTY.
13. REPRESENTATIONS AND WARRANTIES OF CUSTOMER: Customer hereby represents and
warrants for the benefit of ALSG that: (a) The execution, delivery and
performance of this Agreement have been duly authorized by all necessary action
on the part of Customer. (b) Each individual executing such on behalf of
Customer was duly authorized to do so. (c) This Agreement constitutes a legal,
valid and binding agreement of the Customer enforceable in accordance with its
terms. (d) The Machines shall be deemed to be personal property even though
attached to a realty and will not become fixtures under applicable law.
14. SELLING TIME: The Customer shall have the unlimited right to sell time to
third parties so long as it shall retain uninterrupted possession and control of
the Machines.
15. MOVING MACHINES: Customer may move all the Machines, at its expense, upon
thirty (30) days' prior written notice to ALSG, its successors and assigns, to
any other location of Customer, or any location of any division or subsidiary of
Customer, within the continental United States (but in no event to any location
outside the continental United States); provided, however, that the state of
such relocation shall have in effect the Uniform Commercial Code and that all
costs (including, without limitation, additional property taxes or other taxes,
any additional expense of insurance coverage, and any expense associated with
the protection of the title and interest of ALSG, its successors and assigns to
and in the Machines) resulting from such movement shall be borne by Customer. In
the event of such movement, Customer and such division or subsidiary of
Customer, if any, shall cooperate with ALSG in taking all necessary, appropriate
and reasonable measures to protect the title of ALSG, and the interest of an
successor or assignee of ALSG, to and in the Machines.
16. NOTICE: Service of all notice under this Agreement shall be sufficient if in
writing and given personally or mailed to the party involved at its respective
address herein set forth, or any such other address as such party may provide in
writing from time to time. Any such notices mailed to such address shall be
effective when deposited in the United States mails, duly addressed with postage
prepaid. Until further notice, service of all notice to ALSG shall be given at
its general office, Alliance Leasing & Services Group, Ltd., 425 Metro Place
North, Suite 200, Dublin, Ohio 43017.
17. TRANSPORTATION AND INSTALLATION: All transportation, rigging, traffic and
drayage charges upon delivery of the Machines to Customer's site and upon final
redelivery of the Machines to a location designated by ALSG (including, without
limitation, the costs of intransit insurance) are to be paid by Customer. All
costs involved in installation and deinstallation by qualified labor are the
responsibility of the Customer.
18. RETURN OF MACHINES: Upon the expiration of the Initial Term or any extended
term of any lease of Machines under this Agreement, Customer shall return the
Machines so leased to ALSG, or any person designated by ALSG to Customer in
writing, by making the same available, appropriately crated for transport by
truck, at the loading dock of the building which shall be the location of the
Machines upon such expiration, at Customer's sole cost and expense.
19. LEASING ONLY: This Agreement is one of leasing only and Customer shall not
have or acquire any right, title or interest in or to any of the Machines except
the right to use and operate the same as herein provided. Labels or other
markings may be affixed and maintained on the Machines by ALSG indicating ALSG
as the owner thereof. Customer shall keep the Machines free from any marking or
labeling which might be interpreted as a claim of ownership thereof or other
interest therein.
20. REIMBURSEMENT: All advances made by ALSG to discharge and pay any charges or
any liens or encumbrances on the Machines for which Customer is liable hereunder
shall be added to the unpaid balance of the periodic rental charge due and to
become due and collectible as rent hereunder and shall be repayable by Customer
to ALSG immediately, together with interest thereon at one and one half percent
per month or the highest lawful rate, whichever is lower.
21. ASSIGNMENT: This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and (to the extent specified
in any assignment) assigns. Customer, however, shall not assign this Agreement
or sublet any Machines without first obtaining the written consent of ALSG,
which such consent shall not be unreasonably withheld, provided that in no event
will it be deemed unreasonable for ALSG to require as a condition to any such
consent that Customer not be relieved of Liability hereunder. In the event of
any assignment or sublet by Customer, Customer, its assigns and its sublessee,
if any, shall cooperate with ALSG in taking all reasonable measures to protect
the interest or title of ALSG, its successors and assigns, in or to the
Machines. Customer acknowledges and understands that ALSG anticipates either
selling and assigning its interest in certain or all of the Machines to one or
more persons, or granting a security interest in the Machines to a lender o
lenders in consideration of a loan or loans to ALSG. Customer agrees that with
respect to the periodic rental charges and any other payments due and to become
due to ALSG under this Agreement, it shall not, as to any assignee of ALSG's
rights under this Agreement, assert against such assignee, any defense, setoff
or counterclaim (including recoupment against or any diminution of amounts
payable by Customer to such assignee) which it may have against ALSG. ALSG
covenants that Customer shall quietly possess the Machines under this Agreement
notwithstanding any such assignment by ALSG, subject to and in accordance with
the provisions of this Agreement so long as Customer is not in default
hereunder.
22. DEFAULT BY CUSTOMER: It shall be deemed a Default by Customer hereunder if
the Customer (a) defaults in the payment of any sum of money due hereunder
beyond the tenth (10th) day after the same shall become due hereunder; (b)
defaults in the performance of any other of its obligations under this Agreement
for a continuous period of thirty (30) days after receipt by Customer of written
notice thereof from ALSG, its successors or assigns; (c) performs any
affirmative act of insolvency or files any petition or takes any other action
under any bankruptcy, reorganization, insolvency or moratorium law or any other
law or laws for the relief of, or relating to, debtors; (d) is the subject of
filing of any involuntary petition under any bankruptcy statute which is not
dismissed within sixty (60) days thereafter or the appointment of any receiver
or trustee to take possession of the properties of Customer, unless such
petition or appointment is set aside or withdrawn or ceases to be in effect
within sixty (60) days from the date of said filing or appointment; (e) has a
substantial part of its property or any part of the Machines subjected to any
levy, seizure, assignment or sale for or by any creditor or governmental agency;
or (f) defaults under any other agreement between Customer and ALSG, its
successors or assigns.
In the event of any Default, ALSG, its successors or assigns, may at its option:
(i) terminate this Agreement; (ii) whether or not this Agreement is terminated,
take immediate possession of any or all of the Machines, wherever situated, and
for such purpose enter upon any premises without liability for so doing; (iii)
sell, dispose of, hold, use or lease any Machines as ALSG in its sole discretion
may decide, without any duty to account to Customer, and Customer shall remain
liable for the remaining unpai rent for the balance of the respective Initial
Term relating to such Machines and for other charges payable by Customer in
accordance with this Agreement as provided herein; (iv) declare immediately due
and payable the present value of all rentals remaining unpaid for the balance of
the term of this Agreement (such present value to be computed on the basis of
the discount rate as defined in the Schedule, applied from the date upon which
such rental would be paid), in which event the same shall be accelerated and
immediately due and payable, which rentals shall be deemed liquidated damages
and not a penalty; and (v) exercise any other right or remedy which may be
available in law or equity. Notwithstanding ALSG's exercise of any of the
foregoing remedies, ALSG may recover from Customer all rentals and other sums
accrued and unpaid under any terms hereof. The above remedies, to the extent
permitted by law, shall be deemed cumulative and may be exercised successively
or concurrently.
23. FINANCIAL INFORMATION: As soon as practicable after the close of each fiscal
year of customer, Customer will furnish to ALSG a copy of its annual audit
report prepared by independent certified accountants, or other accountants
satisfactory to ALSG, unless the equivalent of such report is available to ALSG
upon request, without charge or investment, in the form of Customer's annual
report to shareholders, during each such year at such time.
24. GENERAL: The terms and conditions of this Agreement supersede those of all
previous agreements between the parties with respect to the use of the Machines,
and such use hereafter is subject to the terms and conditions of the agreement.
No modification or waiver of any of the terms and conditions of this Agreement
nor consent to any departure therefrom by Customer shall in any event be
effective unless the same shall be in writing signed by ALSG and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose given. Any provision hereof prohibited by, or unlawful or
unenforceable under, any applicable law of any jurisdiction shall be ineffective
without invalidating the remaining provisions of this Agreement; provided,
however, that where the provisions of any such applicable law may be waived,
they are hereby waived by Customer to the full extent permitted by law to the
end that this Agreement shall be deemed to be a valid and binding agreement
enforceable in accordance with its terms.
If legal action is required to enforce the terms and conditions of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees
and other expenses.
Master Equipment Lease No.
CRS96120
Name of Lessee CARDINAL REALTY SERVICES, INC.
Master Equipment Lease Date
SEPTEMBER 30, 1996
Address of Lessee 6954 AMERICANA PARKWAY,
REYNOLDSBURG, OH 43068
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF OHIO (WITHOUT
REGARD TO CONFLICT OF LAWS) AND CONSTITUTES THE ENTIRE AGREEMENT BETWEEN
CUSTOMER AND ALSG WITH RESPECT TO THE FURNISHING OF MACHINE USE HEREUNDER.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on behalf of each of them as of the date set forth at the beginning of
this Agreement.
ALLIANCE LEASING & SERVICES GROUP, LTD. CARDINAL REALTY SERVICES, INC.
BY:
--------------------------------------
BY:
--------------------------------------
Its duly authorized representative
TITLE:
-------------------------------------
[Alliance Leasing & Services Group Letterhead]
SCHEDULE A DATED SEPTEMBER 30, 1996
TO MASTER EQUIPMENT LEASE NO. CRS96120
DATED SEPTEMBER 30, 1996
CUSTOMER: CARDINAL REALTY SERVICES, INC.
EQUIPMENT LOCATION: 6954 AMERICANA PARKWAY
REYNOLDSBURG, OH 43068
COMMENCEMENT DATE: OCTOBER 1, 1996
MANUFACTURER: IBM
INITIAL TERM: 36 MONTHS after the first day of the calendar quarter immediately
following the Commencement Date.
QUANTITY TYPE MODEL DESCRIPTION SERIAL QUARTERLY STIPULATED
NO. RENT LOSS VALUE
---------- -----------
See Attachment #1 Totals: $48,369.00 $580,428.00
QUARTERLY RENT: Notwithstanding Section 2 of the Master Equipment Lease,
Customer and ALSG acknowledge and agree that Rent payable under this Schedule
shall be paid quarterly rather than monthly, quarterly rent shall be due and
payable in advance on the first day of each calendar quarter, and the first
payment shall be a pro rata portion of the quarterly rental charge calculated on
a ninety day basis and shall be due and payable when invoiced by ALSG. The terms
of this Schedule shall be interpreted so as to be consistent with the intention
of the parties that rental be paid on a quarterly basis.
MASTER EQUIPMENT LEASE: This Schedule is entered into pursuant to the Master
Equipment Lease identified above, a copy of which each party hereto has been
provided. All of the terms, conditions, representations and warranties of the
Master Equipment Lease are hereby incorporated by reference herein and made a
part hereof as if they were expressly set forth in this Schedule. This Schedule
constitutes a separate lease with respect to the Machines described herein. By
their execution and delivery of this Schedule, the parties hereby reaffirm as of
the date hereof all of the terms, conditions, representations and warranties of
the Master Equipment Lease, except as modified herein. Discount rate: In
calculating present value with regard to item 22 of the Master Equipment Lease,
the discount rate to be used will be the lesser of the Federal Reserve discount
window borrowing rate in effect at the Commencement Date or 6%.
Alliance Leasing & Services Group, Ltd. Cardinal Realty Services, Inc.
BY: /s/ David K. Kunchal BY: /s/ Mark D. Thompson
-------------------------------- ----------------------------------
Its duly authorized representative TITLE: E.V.P. and Chief Financial Officer
<PAGE> 2
ATTACHMENT #1
TO MASTER EQUIPMENT LEASE NUMBER CRS96120 SCHEDULE A
QUANTITY TYPE MODEL DESCRIPTION SERIAL NO.
1 9406 510 AS/400 Model 2143
2 /1602 1.03 Disk Unit
1 /2619 Token Ring Card
1 /2621 Tape Controller
1 /2623 Six Line Comm Controller
3 /2657 EIA 232/V.24 Two Line
1 /2674 Optical Bus Adapter
1 /2686 Optical Link Processor
1 /5044 System Unit Exp Rack
2 /6140 Workstation Controller
3 /6501 DASD Controller
1 /6606 1.96 Disk Unit
2 /7255 Opt Base 256MB Main Storage
1 9337 480 Disk Unit
4 /1288 4.19GB Disk Unit
1 9337 440 Disk Unit
4 /1248 1.96 Disk Unit
1 3590 B11 Cartridge Tape Drive
1 7857 017 Modem
1 J.D. Edwards Software
Customer Initials: MDT
---
E.V.P / CFO
<PAGE> 3
[Alliance Leasing & Services Group Letterhead]
CERTIFICATE OF ACCEPTANCE
ACKNOWLEDGMENT OF ASSIGNMENT
AND
INSURANCE OBLIGATION
CUSTOMER'S CERTIFICATE OF ACCEPTANCE & ACKNOWLEDGEMENT OF ASSIGNMENT As Lessee
under Master Equipment Lease CRS96120 dated September 30, 1996 ("Lease") entered
into with Alliance Leasing & Services Group, Ltd. ("ALSG"), we do hereby certify
that we have as of the date hereof inspected each item of equipment described on
Schedule(s) B, a copy of each of which is attached hereto, and found the same to
be in good operating condition; and, by execution and delivery of this
Certificate, we do hereby unconditionally accept each said item of equipment as
installed for the Lease.
In addition, we hereby acknowledge that we have been advised by ALSG that ALSG
anticipates assigning the Schedule(s) to a lender ("Lender") in consideration of
a loan to ALSG. We hereby authorize ALSG to enter the Lender's name in the space
provided below. Return of a copy of this certificate to us including the
Lender's name below, counter-executed by ALSG , will constitute our
acknowledgment of this assignment. We will thereafter remit all future rental
payments to the Lender at the address given below.
For the express benefit of the Lender, we hereby affirm all of our covenants and
agreements under the Lease; we hereby affirm that the Lease and Schedule(s) are
in full force and effect and that as of the date hereof no event of default has
occurred under the Lease; and we hereby specifically covenant and agree that,
with respect to the periodic rental charges and other payments due and to become
due under the Lease, we shall not assert for any reason whatsoever against the
Lender, as assignee of ALSG, any defense, set-off, or counterclaim (including
recoupment against or any diminution of amounts payable by Lessee to the Lender)
which we may have against ALSG.
CUSTOMER'S ACKNOWLEDGMENT OF INSURANCE OBLIGATION As Lessee under Master
Equipment Lease CRS96120 dated September 30, 1996 with ALSG as Lessor, we hereby
acknowledge our obligation to promptly furnish a Certificate or Evidence of
Insurance providing coverage on the equipment in our Lease Schedule(s) B dated
September 30, 1996. The Loss Payable clause will be in favor of "ALSG and its
Successors and Assigns, as their interests may appear," and the amount will be
$580,428.00
Please be advised that this request has been made of
Northfield Insurance Co. of St. Paul, Minnesota, (800) 237-9334
- ---------------------------- ------------------- -----------------
(Customer's Insurance Agent) (Location) (Telephone Number)
and that such Certificate or Evidence of Insurance will be shortly forthcoming.
CARDINAL REALTY SERVICES, INC. ALLIANCE LEASING & SERVICES GROUP, LTD.
By: /s/ Mark D. Thompson By: /s/ David K. Kunchal
------------------------ -------------------------
Date: 9/30/96 Date: 9/30/96
--------------------- -------
Title: E.V.P. & Chief Financial Officer Title: President
--------------------------------- ----------
Schedule(s) A has (have) been assigned to:
Lender's Name:
Lender's Address:
<PAGE> 4
ADDENDUM #1
This is an addendum to Schedule A dated September 30, 1996 to Master Equipment
Lease No. CRS96120 dated September 30, 1996, by and between Cardinal Realty
Services, Inc. ("Customer") and Alliance Leasing & Services Group, Ltd.
("ALSG").
In consideration of the respective parties entering into the Schedule, providing
for the lease of certain equipment by ALSG to Customer, ALSG and Customer hereby
agree as follows:
At the end of the Initial Term and upon payment in full of all of
Customer's obligations under the Schedule and Master Equipment Lease,
Customer may purchase the equipment on this Schedule for an amount
equal to the then current fair market value of the equipment.
At the end of the Initial Term, ALSG will offer Customer an extension
of the lease of the equipment on this Schedule at a fair market value
monthly rate.
At the end of the Initial Term and upon payment in full of all of
Customer's obligations under the Schedule and Master Equipment Lease,
Customer may return the equipment on this Schedule with no further
obligation.
Accepted and agreed upon this 7th day of January, 1996.
Alliance Leasing & Services Group, Ltd. Cardinal Realty Services, Inc.
By: /s/ David K. Kunchal By: /s/ Mark D. Thompson
-------------------- ---------------------
Title: President Title: EVP and CFO
<PAGE> 5
ADDENDUM #2
This is an addendum to Schedule A dated September 30, 1996 to Master Equipment
Lease No. CRS96120 dated September 30, 1996, by and between Cardinal Realty
Services, Inc. ("Customer") and Alliance Leasing & Services Group, Ltd.
("ALSG").
In consideration of the respective parties entering into the Schedule, providing
for the lease of certain equipment by ALSG to Customer, ALSG and Customer hereby
agree as follows:
ALSG will make one (1) payment directly to Customer according to the
following payment schedule:
Payment Number Date Due Payment Amount
-------------- -------- -------------
1 09/30/96 $87,996.00
Accepted and agreed upon this 30th day of September, 1996.
Alliance Leasing & Services Group, Ltd. Cardinal Realty Services, Inc.
By: /s/ David K. Kunchal By: /s/ Mark D. Thompson
--------------------------------- ------------------------
Title: President Title: EVP and Chief Financial Officer
<PAGE> 6
ADDENDUM #3
This is an addendum to Schedule A dated September 30, 1996 to Master Equipment
Lease No. CRS96120 dated September 30, 1996, by and between Cardinal Realty
Services, Inc. ("Customer") and Alliance Leasing & Services Group, Ltd.
("ALSG").
In consideration of the respective parties entering into the Schedule, providing
for the lease of certain equipment by ALSG to Customer, ALSG and Customer hereby
agree as follows:
ALSG will assume responsibility for the fair market value obligation as
of September 30, 1997 for the equipment listed below:
Qty Model# Description
--- ------ -----------
1 9406-F50 AS/400
1 2619 Token Ring Card
1 2621 Tape Controller
1 2623 Six Line Comm Controller
3 2657 EIA 232/V.24 Two Line
1 5042 System Unit Exp. Rack
2 6140 Workstation Controller
1 6501 DASD Controller
1 9337-440 Disk Unit
4 1248 1.96 Disk Unit
Accepted and agreed upon this 30th day of September, 1996.
Alliance Leasing & Services Group, Ltd. Cardinal Realty Services, Inc.
By: /s/ David K. Kunchal By: /s/ Mark D. Thompson
-------------------- --------------------
Title: President Title: EVP and Chief Financial Officer
<PAGE> 7
SCHEDULE B DATED January 6, 1997
TO MASTER EQUIPMENT LEASE NO. CRS96120
DATED September 30, 1996
CUSTOMER: Cardinal Realty Services, Inc.
EQUIPMENT LOCATION: 6954 Americana Parkway
Reynoldsburg, OH 43068
COMMENCEMENT DATE: November 29, 1996
MANUFACTURER: POWERSITE
INITIAL TERM: 36 MONTHS after the first day of the calendar quarter immediately
following the Commencement Date.
QUANTITY TYPE MODEL DESCRIPTION SERIAL QUARTERLY STIPULATED
NO. RENT LOSS VALUE
---------- -----------
350 PowerSite System Copy $23,352.00 $280,224.00
This Schedule is a schedule to Master Equipment Lease Agreement Number
CRS96120 ("Agreement") between Alliance Leasing and Services Group, Ltd.
and Cardinal Realty Services, Inc. ("Customer"), and assigned to LeaseNet,
Inc. ("Lessor").
QUARTERLY RENT: Notwithstanding Section 2 of the Master Equipment Lease,
Customer and LeaseNet acknowledge and agree that Rent payable under this
Schedule shall be paid quarterly rather than monthly, quarterly rent shall be
due and payable in advance on the first day of each calendar quarter, and the
first payment shall be a pro rata portion of the quarterly rental charge
calculated on a ninety day basis and shall be due and payable when invoiced by
LeaseNet . The terms of this Schedule shall be interpreted so as to be
consistent with the intention of the parties that rental be paid on a quarterly
basis.
MASTER EQUIPMENT LEASE: This Schedule is entered into pursuant to the Master
Equipment Lease identified above, a copy of which each party hereto has been
provided. All of the terms, conditions, representations and warranties of the
Master Equipment Lease are hereby incorporated by reference herein and made a
part hereof as if they were expressly set forth in this Schedule. This Schedule
constitutes a separate lease with respect to the Machines described herein. By
their execution and delivery of this Schedule, the parties hereby reaffirm as of
the date hereof all of the terms, conditions, representations and warranties of
the Master Equipment Lease, except as modified herein. Discount rate: In
calculating present value with regard to item 22 of the Master Equipment Lease,
the discount rate to be used will be the lesser of the Federal Reserve discount
window borrowing rate in effect at the Commencement Date or 6%.
LeaseNet, Inc. Cardinal Realty Services, Inc.
BY: /s/ David K. Kunchal BY: /s/ Mark D. Thompson
-------------------------------------- --------------------------
Its duly authorized representative TITLE: E.V.P. and CFO
<PAGE> 8
CERTIFICATE OF ACCEPTANCE
ACKNOWLEDGMENT OF ASSIGNMENT
AND
INSURANCE OBLIGATION
CUSTOMER'S CERTIFICATE OF ACCEPTANCE & ACKNOWLEDGEMENT OF ASSIGNMENT As Lessee
under Master Equipment Lease CRS96120 dated September 30, 1996 ("Lease") entered
into with LeaseNet, Inc. we do hereby certify that we have as of the date hereof
inspected each item of equipment described on Schedule(s) B, a copy of each of
which is attached hereto, and found the same to be in good operating condition;
and, by execution and delivery of this Certificate, we do hereby unconditionally
accept each said item of equipment as installed for the Lease.
In addition, we hereby acknowledge that we have been advised by LeaseNet that
LeaseNet anticipates assigning the Schedule(s) to a lender ("Lender") in
consideration of a loan to LeaseNet. We hereby authorize LeaseNet to enter the
Lender's name in the space provided below. Return of a copy of this certificate
to us including the Lender's name below, counter-executed by LeaseNet , will
constitute our acknowledgment of this assignment. We will thereafter remit all
future rental payments to the Lender at the address given below.
For the express benefit of the Lender, we hereby affirm all of our covenants and
agreements under the Lease; we hereby affirm that the Lease and Schedule(s) are
in full force and effect and that as of the date hereof no event of default has
occurred under the Lease; and we hereby specifically covenant and agree that,
with respect to the periodic rental charges and other payments due and to become
due under the Lease, we shall not assert for any reason whatsoever against the
Lender, as assignee of LeaseNet, any defense, set-off, or counterclaim
(including recoupment against or any diminution of amounts payable by Lessee to
the Lender) which we may have against LeaseNet.
CUSTOMER'S ACKNOWLEDGMENT OF INSURANCE OBLIGATION As Lessee under Master
Equipment Lease CRS96120 dated September 30, 1996 with LeaseNet as Lessor, we
hereby acknowledge our obligation to promptly furnish a Certificate or Evidence
of Insurance providing coverage on the equipment in our Lease Schedule(s) B
dated January 6, 1997. The Loss Payable clause will be in favor of "LeaseNet and
its Successors and Assigns, as their interests may appear," and the amount will
be $280,224.00
Please be advised that this request has been made of
____________________________ of ________________________ , _____________________
(Customer's Insurance Agent) (Location) (Telephone Number)
and that such Certificate or Evidence of Insurance will be shortly forthcoming.
LEASENET, INC. CARDINAL REALTY SERVICES, INC.
By: /s/ David K. Kunchal By: /s/ Mark D. Thompson
--------------------- ----------------------
Date: 1-7-97 Date: November 29, 1996
------------------- ----------------------
Title: President Title: EVP and CFO
------------------ ----------------------
Schedule(s) B has (have) been assigned to:
Lender's Name: Star Bank, N.A.
Lender's Address: 425 Walnut Street
Cincinnati, OH 45201
<PAGE> 9
SCHEDULE C DATED April 1, 1997
TO MASTER EQUIPMENT LEASE NO. CRS96120
DATED September 30, 1996
CUSTOMER: Cardinal Realty Services, Inc.
EQUIPMENT LOCATION: 6954 Americana Parkway
Reynoldsburg, OH 43068
COMMENCEMENT DATE: April 1, 1997
MANUFACTURER: Various
INITIAL TERM: 36 MONTHS after the first day of the calendar quarter immediately
following the Commencement Date.
<TABLE>
<CAPTION>
QUANTITY TYPE MODEL DESCRIPTION SERIAL QUARTERLY STIPULATED
NO. RENT LOSS VALUE
<S> <C> <C> <C> <C> <C> <C>
2 BK280B Back-ups 280-280 VA Standby $498.00 $5,974.00
2 C4661A M330 OfficeJet Prt/Fax/Copier/Scanner SUS67NA10HK
SUS67NA10HY
1 07-00-01817 PCAnywhere WIN95/NT V7.5
2 07-00-01850 Norton Antivirus V2.0 f/WIN95
2 070-054V400 Works V4.0 f/WIN95
2 TST800RFBET Tapestor Travan 800 INT 800 MB
QIC80 w/TRI, B/U
2 0037-3131 Acer Entra P/100 16MB/1.08GB 1700042763
256K Cache 1700042828
2 0053-0020 Acer 15" .28DP UVGA Monitor M5500006685
M5500006669
2 0010-0080 NCM 8x CD-ROM
1 07-91-00505 PC Anywhere V7.5 f/WIN95,
NT A-Node
2 0053-4004 IMB VRAM f/Acer Entra
1 MVPV34ILC 33.6INT 14.4S/R Fax V.34
1 0260-0101 Max 33.6INT V.34 Netpacer
2 PAR/BD-6 6' IEEE 1284 Printer Cable DB25-Cent36M
</TABLE>
This Schedule is a schedule to Master Equipment Lease Agreement Number
CRS96120 ("Agreement") between Alliance Leasing and Services Group, Ltd.
and Cardinal Realty Services, Inc. ("Customer"), and assigned to LeaseNet,
Inc. ("Lessor").
QUARTERLY RENT: Notwithstanding Section 2 of the Master Equipment Lease,
Customer and LeaseNet acknowledge and agree that Rent payable under this
Schedule shall be paid quarterly rather than monthly, quarterly rent shall be
due and payable in advance on the first day of each calendar quarter, and the
first payment shall be a pro rata portion of the quarterly rental charge
calculated on a ninety day basis and shall be due and payable when invoiced by
LeaseNet . The terms of this Schedule shall be interpreted so as to be
consistent with the intention of the parties that rental be paid on a quarterly
basis.
MASTER EQUIPMENT LEASE: This Schedule is entered into pursuant to the Master
Equipment Lease identified above, a copy of which each party hereto has been
provided. All of the terms, conditions, representations and warranties of the
Master Equipment Lease are hereby incorporated by reference herein and made a
part hereof as if they were expressly set forth in this Schedule. This Schedule
constitutes a separate lease with respect to the Machines described herein. By
their execution and delivery of this Schedule, the parties hereby reaffirm as of
the date hereof all of the terms, conditions, representations and warranties of
the Master Equipment Lease, except as modified herein. Discount rate: In
calculating present value with regard to item 22 of the Master Equipment Lease,
the discount rate to be used will be the lesser of the Federal Reserve discount
window borrowing rate in effect at the Commencement Date or 6%.
LeaseNet, Inc. Cardinal Realty Services, Inc.
BY: /s/ David K. Kunchal BY: /s/ Mark D. Thompson
--------------------- ---------------------
Its duly authorized representative TITLE: Executive V.P. and CFO
<PAGE> 10
CERTIFICATE OF ACCEPTANCE
ACKNOWLEDGMENT OF ASSIGNMENT
AND
INSURANCE OBLIGATION
CUSTOMER'S CERTIFICATE OF ACCEPTANCE & ACKNOWLEDGEMENT OF ASSIGNMENT As Lessee
under Master Equipment Lease CRS96120 dated September 30, 1996 ("Lease") entered
into with LeaseNet, Inc. we do hereby certify that we have as of the date hereof
inspected each item of equipment described on Schedule(s) C, a copy of each of
which is attached hereto, and found the same to be in good operating condition;
and, by execution and delivery of this Certificate, we do hereby unconditionally
accept each said item of equipment as installed for the Lease.
In addition, we hereby acknowledge that we have been advised by LeaseNet that
LeaseNet anticipates assigning the Schedule(s) to a lender ("Lender") in
consideration of a loan to LeaseNet. We hereby authorize LeaseNet to enter the
Lender's name in the space provided below. Return of a copy of this certificate
to us including the Lender's name below, counter-executed by LeaseNet , will
constitute our acknowledgment of this assignment. We will thereafter remit all
future rental payments to the Lender at the address given below.
For the express benefit of the Lender, we hereby affirm all of our covenants and
agreements under the Lease; we hereby affirm that the Lease and Schedule(s) are
in full force and effect and that as of the date hereof no event of default has
occurred under the Lease; and we hereby specifically covenant and agree that,
with respect to the periodic rental charges and other payments due and to become
due under the Lease, we shall not assert for any reason whatsoever against the
Lender, as assignee of LeaseNet, any defense, set-off, or counterclaim
(including recoupment against or any diminution of amounts payable by Lessee to
the Lender) which we may have against LeaseNet.
CUSTOMER'S ACKNOWLEDGMENT OF INSURANCE OBLIGATION As Lessee under Master
Equipment Lease CRS96120 dated September 30, 1996 with LeaseNet as Lessor, we
hereby acknowledge our obligation to promptly furnish a Certificate or Evidence
of Insurance providing coverage on the equipment in our Lease Schedule(s) C
dated April 1, 1997. The Loss Payable clause will be in favor of "LeaseNet and
its Successors and Assigns, as their interests may appear," and the amount will
be $5,974.00.
Please be advised that this request has been made of
_____________________________ of _________________ , __________________________
(Customer's Insurance Agent) (Location) (Telephone Number)
and that such Certificate or Evidence of Insurance will be shortly forthcoming.
LEASENET, INC. CARDINAL REALTY SERVICES, INC.
By: /s/ David K. Kunchal By: /s/ Ronald P. Koegler
--------------------- ----------------------
Date: 5-5-97 Date: 5/2/97
---------------- ------
Title: President Title: VP and Controller
--------- -----------------
Schedule(s) C has (have) been assigned to:
Lender's Name: Star Bank, N.A.
Lender's Address: 425 Walnut Street
Cincinnati, OH 45201
<PAGE> 1
Cardinal Ancillary Insurance Agency, Inc.
Cardinal Ancillary Insurance Agency, Inc., a Delaware
corporation
Cardinal Apartment Management Group, Inc.
Cardinal Apartment Services, Inc.
Cardinal GP VIII Corporation
Cardinal GP X Corporation
Cardinal GP XII Corporation
Cardinal GP XIII Corporation
Cardinal GP XIV Corporation
Cardinal GP XV Corporation
Cardinal GP XVI Corporation
Cardinal GP XVII Corporation
Cardinal GP XVIII Corporation
Cardinal LP XIX Corporation
Cardinal Industries Development Corporation
Cardinal Industries of Florida Services Corporation
Cardinal Industries of Georgia Services Corporation
Cardinal Industries of Texas, Inc.
Cardinal Industries Services Corporation
Cardinal Realty Company
Cardinal Regulatory of Kentucky, Inc.
Cardinal Regulatory of West Virginia, Inc.
CRSI SPV 2, INC.
CRSI SPV 3, INC.
CRSI SPV 4, INC.
CRSI SPV 5, INC.
CRSI SVP 6, INC.
CRSI SPV 7, INC.
CRSI SPV 8, INC.
CRSI SPV 9, INC.
CRSI SPV 10, INC.
CRSI SPV 11, INC.
CRSI SPV 12, INC.
CRSI SPV 13, INC.
CRSI SPV 14, INC.
CRSI SPV 15, INC.
CRSI SPV 16, INC.
CRSI SPV 17, INC.
CRSI SPV 18, INC.
CRSI SPV 19, INC.
CRSI SPV 20, INC.
CRSI SPV 21, INC.
CRSI SPV 22, INC.
CRSI SPV 23, INC.
CRSI SPV 24, INC.
CRSI SPV 25, INC.
CRSI SPV 26, INC.
CRSI SPV 27, INC.
CRSI SPV 28, INC.
CRSI SPV 29, INC.
CRSI SPV 30, INC.
CRSI SPV 31, INC.
CRSI SPV 32, INC.
CRSI SPV 33, INC.
CRSI SPV 34, INC.
CRSI SPV 35, INC.
CRSI SPV 36, INC.
CRSI SPV 37, INC.
CRSI SPV 38, INC.
CRSI SPV 39, INC.
CRSI SPV 40, INC.
CRSI SPV 42, INC.
CRSI SPV 43, INC.
CRSI SPV 44, INC.
CRSI SPV 46, INC.
CRSI SPV 47, INC.
CRSI SPV 48, INC.
CRSI SPV 49, INC.
<PAGE> 2
CRSI SPV 50, INC.
CRSI SPV 51, INC.
CRSI SPV 52, INC.
CRSI SPV 53, INC.
CRSI SPV 55, INC.
CRSI SPV 56, INC.
CRSI SPV 57, INC.
CRSI SPV 58, INC.
CRSI SPV 59, INC.
CRSI SPV 60, INC.
CRSI SPV 61, INC.
CRSI SPV 62, INC.
CRSI SPV 63, INC.
CRSI SPV 64, INC.
CRSI SPV 65, INC.
CRSI SPV 66, INC.
CRSI SPV 67, INC.
CRSI SPV 68, INC.
CRSI SPV 69, INC.
CRSI SPV 71, INC.
CRSI SPV 72, INC.
CRSI SPV 74, INC.
CRSI SPV 75, INC.
CRSI SPV 76, INC.
CRSI SPV 77, INC.
CRSI SPV 78, INC.
CRSI SPV 79, INC.
CRSI SPV 80, INC.
CRSI SPV 81, INC.
CRSI SPV 82, INC.
CRSI SPV 83, INC.
CRSI SPV 84, INC.
CRSI SPV 85, INC.
CRSI SPV 86, INC.
CRSI SPV 87, INC.
CRSI SPV 88, INC.
CRSI SPV 90, INC.
CRSI SPV 91, INC.
CRSI SPV 92, INC.
CRSI SPV 93, INC.
CRSI SPV 94, INC.
CRSI SPV 95, INC.
CRSI SPV 96, INC.
CRSI SPV 98, INC.
CRSI SPV 99, INC.
CRSI SPV 100, INC.
CRSI SPV 101, INC.
CRSI SPV 102, INC.
CRSI SPV 103, INC.
CRSI SPV 10327, INC.
CRSI SPV 10375, INC.
CRSI SPV 10437, INC.
CRSI SPV 10455, INC.
CRSI SPV 10491, INC.
CRSI SPV 10512, INC.
CRSI SPV 10523, INC.
CRSI SPV 10524, INC.
CRSI SPV 10542, INC.
CRSI SPV 10563, INC.
CRSI SPV 10585, INC.
CRSI SPV 10600, INC.
CRSI SPV 10604, INC.
CRSI SPV 10606, INC.
CRSI SPV 10642, INC.
CRSI SPV 10648, INC.
CRSI SPV 10658, INC.
CRSI SPV 10664, INC.
CRSI SPV 10672, INC.
CRSI SPV 10674, INC.
CRSI SPV 10683, INC.
CRSI SPV 10691, INC.
<PAGE> 3
CRSI SPV 10714, INC.
CRSI SPV 10724, INC.
CRSI SPV 10725, INC.
CRSI SPV 10726, INC.
CRSI SPV 10727, INC.
CRSI SPV 10729, INC.
CRSI SPV 10752, INC.
CRSI SPV 10758, INC.
CRSI SPV 10773, INC.
CRSI SPV 10790, INC.
CRSI SPV 10810, INC.
CRSI SPV 10816, INC.
CRSI SPV 10841, INC.
CRSI SPV 10853, INC.
CRSI SPV 10936, INC.
CRSI SPV 1996 PW1, INC.
CRSI SPV 1996 PW2, INC.
CRSI SPV 1996 PW3, INC.
CRSI SPV 1996 PW4, INC.
CRSI SPV 20115, INC.
CRSI SPV 20129, INC.
CRSI SPV 20164, INC.
CRSI SPV 20190, INC.
CRSI SPV 20199, INC.
CRSI SPV 20208, INC.
CRSI SPV 20212, INC.
CRSI SPV 20218, INC.
CRSI SPV 20224, INC.
CRSI SPV 20230, INC.
CRSI SPV 20246, INC.
CRSI SPV 20284, INC.
CRSI SPV 20309, INC.
CRSI SPV 20314, INC.
CRSI SPV 20405, INC.
CRSI SPV 20442, INC.
CRSI SPV 20449, INC.
CRSI SPV 20471, INC.
CRSI SPV 20487, INC.
CRSI SPV 20519, INC.
CRSI SPV 20521, INC.
CRSI SPV 20530, INC.
CRSI SPV 20535, INC.
CRSI SPV 20546, INC.
CRSI SPV 30109, INC.
CRSI SPV 30114, INC.
CRSI SPV 30130, INC.
CRSI SPV 30138, INC.
CRSI SPV 30149, INC.
CRSI SPV 30150, INC.
CRSI SPV 30168, INC.
CRSI SPV 30176, INC.
CRSI SPV 30184, INC.
CRSI SPV 30197, INC.
CRSI SPV 30231, INC.
CRSI SPV 30269, INC.
CRSI SPV 30353, INC.
CRSI SPV 30358, INC.
CRSI SPV 40101, INC.
CRSI SPV 50903, INC.
CRSI SPV 50906, INC.
CRSI SPV 50951, INC.
Jupiter Cove Apartments, LLC
Jupiter Cove Apartments III, LLC
LEAF Asset Management, INC.
Lexford Evergreen LLC
Lexford Guilford GP LLC
Lexford Guilford LP LLC
Lexford Hidden Pointe GP LLC
Lexford Hidden Pointe LP LLC
Lexford Northwest, INC.*
Lexford Properties, INC.*
Lexford Properties of Colorado, INC.*
Lexreit Properties, INC.
Premiere Management Company*
R/E Management Services, INC.
R.E.I. Equities, INC.
Walker Place Apartments Limited Liability Company
Whispering Pines II, LLC
* These are subsidiaries of Lexford Properties, INC. which is a subsidiary of
Lexford, INC. n/k/a Lexford Residential Trust.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE BALANCE SHEET AND THE STATEMENT
OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 2,569
<SECURITIES> 0
<RECEIVABLES> 5,840
<ALLOWANCES> 941
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 161,369
<DEPRECIATION> 9,152
<TOTAL-ASSETS> 241,598
<CURRENT-LIABILITIES> 0
<BONDS> 149,999
0
0
<COMMON> 85
<OTHER-SE> 74,761
<TOTAL-LIABILITY-AND-EQUITY> 241,598
<SALES> 0
<TOTAL-REVENUES> 70,367
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 50,365
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,427
<INCOME-PRETAX> 5,575
<INCOME-TAX> 2,189
<INCOME-CONTINUING> 3,386
<DISCONTINUED> 0
<EXTRAORDINARY> (180)
<CHANGES> 0
<NET-INCOME> 3,206
<EPS-PRIMARY> 0.40
<EPS-DILUTED> 0.39
<FN>
THE REGISTRANT HAS A NON-CLASSIFIED BALANCE SHEET
</FN>
</TABLE>
<PAGE> 1
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
---------------------------------------------------------------------------------------------------
Laundry,
Vending
Rentable Rent Interest Security & Other Net
Prop # Name State Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
- ---------------------------------------------------------------------------------------------------------------------------------
RENTAL PROPERTIES
----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1005 ANNHURST III OH 52 266,666 3,545 943 5,610 (12,946) (529) 263,289
1039 LAUREL BAY MI 68 404,699 4,126 4,364 5,666 (26,237) (5,050) 387,568
1375 RIVERVIEW ESTATES OH 90 397,470 2,592 3,099 8,612 (51,242) (3,066) 357,465
1377 APPLE RIDGE I OH 60 260,373 3,044 2,639 4,591 (35,246) 795 236,196
1389 THE WILLOWS I OH 50 230,548 3,776 5,437 3,958 (27,272) (1,353) 215,094
1439 MONTROSE SQUARE OH 129 575,969 4,019 4,450 269 (77,757) (9,382) 497,568
1542 SPRINGWOOD KY 54 220,126 2,162 523 2,565 (6,718) 871 219,529
1620 MEADOWOOD OH 40 181,496 1,877 1,258 3,883 (13,541) (136) 174,837
1672 RIDGEWOOD ELHART IN 69 341,606 2,718 965 9,505 (25,050) (2,614) 327,130
1690 HEATHMOORE I MI 59 400,239 4,080 1,154 7,313 (20,601) (2,529) 389,656
1750 CEDARWOOD II KY 47 243,419 3,672 970 2,851 (25,324) (4,108) 221,480
1780 BRUNSWICK IL 80 426,228 3,546 819 6,023 (19,044) 403 417,975
1786 SPICEWOOD IN 50 271,070 3,241 2,014 15,964 (9,607) (339) 282,343
1806 WINTHROP CT II OH 38 198,855 3,457 335 1,085 (12,520) (723) 190,489
1809 MEADOWOOD II IN 74 345,615 5,075 3,848 6,302 (47,017) (9,580) 304,243
1810 ACADIA CT II IN 104 563,135 3,730 4,055 16,489 (34,083) 8,129 561,455
1814 ASHFORD HILL OH 77 382,351 3,273 1,658 6,081 (23,621) (3,356) 366,386
1816 CEDARWOOD III KY 48 242,618 2,004 1,394 2,512 (23,850) (2,183) 222,495
1822 MARABOU MILLS I IN 86 444,292 4,147 3,020 13,950 (20,144) (4,670) 440,595
1823 ELMTREE PARK I IN 72 369,561 1,814 1,795 9,928 (20,178) (1,783) 361,137
1824 AMESBURY I OH 68 315,716 2,804 1,223 5,949 (38,565) (3,681) 283,446
1825 BRADFORD PL IL 68 323,086 856 1,223 8,380 (14,435) 639 319,749
1830 SHERBROOK IN 76 402,019 1,688 6,985 10,739 (43,663) (12,430) 365,338
1833 HAYFIELD PARK KY 86 428,652 5,370 4,340 10,169 (6,868) (732) 440,931
1838 CEDARGATE II KY 58 267,745 1,389 2,650 3,430 (18,457) 237 256,994
1839 DARTMOUTH PL II OH 49 281,087 3,215 2,981 3,875 (20,594) (2,586) 267,978
1841 WILLOWOOD II OH 65 280,042 2,481 4,168 3,043 (20,135) (2,731) 266,868
1843 DOGWOOD GLEN I IN 83 433,491 3,777 4,975 10,542 (38,044) (3,417) 411,324
1846 CHERRY GLEN I IN 69 354,147 1,624 1,648 9,634 (22,082) (1,960) 343,011
1853 FOXHAVEN OH 107 503,808 4,053 1,716 8,472 (27,852) (4,625) 485,572
1859 ANNHURST II OH 54 260,743 2,563 1,390 6,565 (23,668) (2,436) 245,157
1863 HUNTER GLEN IL 64 332,221 3,175 1,302 6,089 (16,015) 1,389 328,161
1869 HARVEST GROVE I OH 73 354,528 1,755 853 7,598 (14,878) (5,517) 344,339
1871 CLEARWATER OH 42 244,015 2,262 711 6,112 (28,058) (1,735) 223,307
1877 SHERBROOK PA 73 491,558 5,546 2,693 10,380 (5,796) (344) 504,037
1880 ARAGON WOODS IN 68 352,685 3,087 802 12,564 (36,567) 223 332,794
1885 NEWBERRY II MI 48 260,321 2,928 645 4,379 (11,227) 914 257,960
1887 RIVER GLEN I OH 60 296,606 2,969 2,705 4,507 (9,382) (2) 297,403
1889 APPLEGATE II IN 80 406,286 3,907 3,238 3,958 (25,911) 946 392,424
1895 ROSEWOOD COMMONS II IN 77 390,152 4,862 1,857 9,008 (35,861) (1,951) 368,067
1898 RIDGEWOOD II IN 99 455,763 7,160 2,595 5,144 (30,602) (5,638) 434,422
1908 CHERRY GLENN II IN 69 351,156 2,003 2,320 8,400 (20,908) (2,181) 340,790
1909 LINDENDALE OH 77 378,101 2,053 3,050 8,276 (16,744) (8,463) 366,273
1911 ELMTREE PARK II IN 53 267,675 881 1,678 6,021 (19,193) (2,570) 254,492
1914 WOODLANDS II PA 62 357,137 2,375 2,774 4,709 (22,014) 1,262 346,243
1917 WILLOWOOD II IN 58 285,714 2,170 2,100 1,063 (10,374) 240 280,913
1935 RED DEER II OH 63 332,185 2,885 2,485 2,713 (13,343) 0 326,925
1936 SUFFOLK GROVE II OH 49 282,564 2,835 1,993 2,118 (13,561) (1,663) 274,286
1937 THE WILLOWS III OH 43 215,018 3,902 1,066 6,119 (6,560) 545 220,090
1946 AMBERWOOD OH 63 310,574 3,632 1,362 809 (30,367) (2,753) 283,257
1966 RIVER GLEN II OH 53 283,014 3,974 3,881 3,739 (15,836) (2,748) 276,024
1982 MARABOU MILLS III IN 59 317,714 2,675 2,242 5,592 (13,387) (936) 313,900
1983 CAMBRIDGE COMMONS III IN 75 349,145 2,463 1,167 6,166 (107,514) (1,912) 249,515
1986 GARDEN CT MI 102 587,866 6,662 805 5,814 (8,719) 1,822 594,250
2137 WINDWOOD I FL 63 291,435 1,634 2,566 9,550 (35,301) (5,705) 264,179
2208 GARDEN TERRACE I FL 59 273,296 4,027 1,428 6,968 (34,595) (6,570) 244,554
2385 CANTERBURY CROSSINGS FL 70 488,711 4,666 1,729 4,043 (5,210) (492) 493,447
2455 THYMEWOOD II FL 70 505,351 3,329 2,311 21,557 (58,998) (25,472) 448,078
2462 FOREST GLEN FL 73 359,677 2,806 6,599 6,816 (25,980) (78) 349,840
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
---------------------------------------------------------------------------------------------------
Laundry,
Vending
Rentable Rent Interest Security & Other Net
Prop # Name State Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
- ------------------------------------------------------------------------------------------------------------------------------------
RENTAL PROPERTIES
----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2469 BEL AIRE II FL 51 316,485 1,727 3,338 21,616 (21,177) (18,207) 303,782
2479 HERON POINTE FL 99 509,093 4,393 4,204 12,340 (47,461) (8,338) 474,231
2482 OAKWOOD VILLAGE FL 74 319,298 2,407 2,813 6,851 (15,753) 523 316,139
2487 RIVERS END II FL 69 360,568 2,437 1,591 9,493 (15,181) (9) 358,899
2501 WHISPERING PINES II FL 43 206,700 1,627 3,783 3,857 (21,012) (2,786) 192,169
2512 SKY PINES II FL 52 273,352 1,747 5,724 9,673 (13,717) (15,966) 260,813
2515 HIDDEN ACRES FL 94 476,575 4,935 3,308 9,748 (23,452) (2,584) 468,530
2519 CENTRE LAKE III FL 233 1,454,217 13,932 9,293 86,028 (72,225) (62,022) 1,429,223
2521 BLUEBERRY HILL I FL 68 335,581 6,842 3,036 7,038 (11,323) (2,669) 338,505
2526 HOLLY SANDS II FL 52 272,551 3,289 1,686 6,467 (6,702) 540 277,831
2527 SUNSET WAY I FL 100 639,644 3,091 6,178 27,820 (71,340) (15,607) 589,786
2530 PINE BARRENS FL 104 529,806 4,008 3,472 12,480 (21,764) (1,749) 526,253
2535 PELICAN POINTE I FL 86 424,260 3,091 3,177 17,097 (33,145) (7,788) 406,692
2537 CALIFORNIA GARDENS FL 71 362,530 2,193 2,682 7,206 (64,944) (8,525) 301,142
2543 MIGUEL PL FL 91 400,829 4,521 1,954 3,154 (21,027) (670) 388,761
2545 JUPITER COVE I FL 63 392,377 2,828 4,703 8,631 (12,838) (3,462) 392,239
2546 PELICAN POINTE II FL 74 369,702 2,630 2,109 12,235 (29,512) (7,107) 350,057
2547 MARK LANDING I FL 71 397,361 4,212 6,513 7,463 (21,736) (684) 393,129
2549 JUPITER COVE III FL 63 396,388 2,882 4,025 9,187 (11,471) (1,431) 399,580
2556 HILLSIDE TRACE FL 64 280,651 6,275 1,851 8,035 (8,054) (1,313) 287,445
2559 JEFFERSON WAY I FL 56 305,084 2,705 2,505 1,041 (13,881) (1,389) 296,065
2580 SUNSET WAY II FL 99 640,229 1,997 9,228 25,909 (67,008) (21,365) 588,990
2587 OAK GARDENS FL 106 666,747 4,674 7,091 17,663 (55,284) (10,934) 629,957
3166 CEDAR HILL TN 74 392,614 5,958 2,889 7,034 (18,877) (746) 388,872
3171 LAUREL GLEN GA 81 474,660 5,626 4,632 3,945 (4,935) (3,662) 480,266
3173 SPRINGBROOK SC 92 459,843 6,122 3,245 4,826 (44,353) (1,588) 428,095
3174 LAKESHORE I GA 79 374,859 4,755 6,092 (1,046) (13,103) (2,397) 369,160
3175 GLENVIEW AL 90 383,603 1,324 1,585 4,854 (19,889) 348 371,825
3186 RAMBLEWOOD II GA 102 476,342 2,547 903 7,696 (48,197) (5,113) 434,178
3188 VALLEYBROOK GA 71 401,676 2,588 1,187 8,772 (25,267) 1,631 390,587
3189 WILLOW LAKES SC 95 476,330 4,354 4,045 5,242 (144,462) (4,164) 341,345
3190 GLENWOOD VILLAGE GA 80 383,776 2,675 3,079 6,512 (37,702) (938) 357,402
3208 RAVENWOOD SC 82 418,898 1,194 575 7,432 (38,222) 1,094 390,971
3209 INDIAN LAKE I GA 244 1,451,403 15,281 14,134 31,909 (115,054) (16,131) 1,381,542
3231 WALKER PL TX 67 324,535 102 830 6,836 (20,361) (5,953) 305,989
3233 GREENBRIAR GLEN GA 74 473,940 3,590 1,185 17,070 (41,861) (11,282) 442,642
3400 HATCHERWAY GA 64 265,067 794 4,667 6,740 (47,953) (1,641) 227,674
3417 GLEN ARM MANOR GA 70 319,039 2,997 823 4,730 (6,183) (1,684) 319,722
3480 MILL RUN GA 88 405,985 1,082 2,710 9,627 (15,026) 2,313 406,691
3486 STEWART WAY I GA 69 348,190 1,101 973 6,575 (27,720) (414) 328,705
3494 WILCREST WOODS GA 68 359,438 1,282 3,140 10,848 (13,238) 1,146 362,616
3496 MARSHLANDING II GA 48 240,481 602 2,620 2,951 (22,903) (2,257) 221,494
3522 STEWART WAY II GA 63 331,415 2,248 1,353 6,400 (20,562) (613) 320,241
3532 KINGS COLONY GA 89 472,844 8,164 5,802 12,395 (48,564) (5,786) 444,855
4109 CHERRY TREE MD 100 581,800 7,559 3,770 11,724 (30,594) (13,004) 561,255
4111 FORSYTHIA CT II MD 75 434,150 596 2,030 5,034 (45,701) (6,852) 389,257
4133 MERRIFIELD MD 95 527,544 3,149 5,494 10,728 (35,773) (2,601) 508,541
5886 PICKERINGTON MEADOWS OH 60 320,808 3,399 1,462 6,001 (21,898) (1,794) 307,978
5903 BRUNSWICK II WV 82 387,527 2,272 1,784 4,161 (52,017) 2,002 345,729
5906 AMESBURY II OH 81 368,497 2,176 768 2,259 (58,777) (4,439) 310,484
5910 MARABOU MILLS II IN 63 328,844 7,927 1,603 7,463 (13,648) 304 332,493
5951 HARVEST GROVE II OH 57 290,075 2,385 757 3,950 (21,172) (5,656) 270,339
------------------------------------------------------------------------------------------
111 8,261 43,241,551 380,633 315,397 947,867 (3,213,281) (427,733) 41,244,434
------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
-----------------------------------------------------------------------------------------------------
Prop. Real Contractual Interest Major
Oper. Estate Net First Subord. Payable Depre. Maint. Non
& Taxes & Operating Mortgage Debt To & & Operating Net
Prop # Name State Maint. Insur. Income Interest Interest Lexford Amort Replace. Expenses Income
- ------------------------------------------------------------------------------------------------------------------------------------
RENTAL PROPERTIES
----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1005 ANNHURST III OH 80,644 21,989 160,656 82,274 0 3,005 41,854 2,621 1,910 28,992
1039 LAUREL BAY MI 147,003 55,925 184,640 79,011 0 0 56,241 5,189 4,227 39,972
1375 RIVERVIEW ESTATES OH 143,477 20,776 193,212 122,030 0 0 66,721 16,801 1,271 (13,611)
1377 APPLE RIDGE I OH 73,823 20,279 142,094 88,737 4,438 24,065 31,493 7,727 16,045 (30,411)
1389 THE WILLOWS I OH 78,344 22,109 114,641 52,797 0 0 39,058 5,399 5,786 11,601
1439 MONTROSE SQUARE OH 189,201 61,838 246,529 140,477 0 0 74,705 15,611 58,436 (42,700)
1542 SPRINGWOOD KY 79,540 9,480 130,509 68,784 0 44 35,145 5,023 3,183 18,330
1620 MEADOWOOD OH 94,201 15,415 65,221 38,040 4,814 0 19,960 7,742 2,464 (7,799)
1672 RIDGEWOOD ELHART IN 123,135 34,021 169,974 107,015 0 (659) 48,206 6,505 39,370 (30,463)
1690 HEATHMOORE I MI 114,125 37,434 238,097 133,712 6,743 0 43,916 2,491 7,075 44,160
1750 CEDARWOOD II KY 77,732 14,046 129,702 85,272 4,596 17,745 36,356 6,682 1,586 (22,535)
1780 BRUNSWICK IL 141,669 68,432 207,874 102,195 17,353 356 62,500 7,069 21,920 (3,519)
1786 SPICEWOOD IN 107,634 19,481 155,228 86,642 4,670 433 38,837 1,997 6,244 16,405
1806 WINTHROP CT II OH 62,486 19,834 108,169 63,534 4,586 14,214 32,000 5,964 6,631 (18,760)
1809 MEADOWOOD II IN 145,484 36,391 122,368 65,050 0 3,630 37,208 3,533 786 12,161
1810 ACADIA CT II IN 183,450 69,384 308,621 165,341 0 0 59,802 8,102 (2,766) 78,142
1814 ASHFORD HILL OH 130,439 38,378 197,569 124,950 0 14,947 50,549 9,653 4,622 (7,152)
1816 CEDARWOOD III KY 77,938 13,030 131,527 77,909 0 5,755 42,020 4,629 3,545 (2,331)
1822 MARABOU MILLS I IN 149,856 31,111 259,628 131,446 0 307 61,208 4,484 8,067 54,116
1823 ELMTREE PARK I IN 121,492 35,522 204,123 104,404 0 0 39,470 3,740 5,299 51,210
1824 AMESBURY I OH 103,872 32,173 147,401 105,153 5,259 0 43,489 1,777 6,174 (14,451)
1825 BRADFORD PL IL 117,842 37,238 164,669 114,429 3,908 2,390 21,364 10,056 (7,140) 19,662
1830 SHERBROOK IN 141,248 31,080 193,010 104,704 0 0 42,570 4,231 5,399 36,106
1833 HAYFIELD PARK KY 133,610 18,864 288,457 135,049 7,297 0 58,350 4,352 7,583 75,826
1838 CEDARGATE II KY 81,117 14,781 161,096 87,914 0 0 44,433 5,308 (19,038) 42,479
1839 DARTMOUTH PL II OH 85,987 30,538 151,453 77,045 0 0 37,383 6,589 9,828 20,608
1841 WILLOWOOD II OH 93,939 29,968 142,961 78,439 0 0 24,444 5,046 9,627 25,405
1843 DOGWOOD GLEN I IN 132,484 31,939 246,901 149,829 7,493 2,291 47,220 5,674 5,498 28,896
1846 CHERRY GLEN I IN 118,657 38,971 185,383 119,187 0 0 49,109 1,874 35,147 (19,934)
1853 FOXHAVEN OH 159,535 41,669 284,368 165,825 0 0 59,729 2,307 17,169 39,338
1859 ANNHURST II OH 83,926 21,057 140,174 94,356 678 0 38,789 3,548 2,180 623
1863 HUNTER GLEN IL 110,378 35,654 182,129 89,739 0 0 43,499 4,582 (1,078) 45,387
1869 HARVEST GROVE I OH 102,068 30,564 211,707 121,413 0 0 38,472 2,975 5,217 43,630
1871 CLEARWATER OH 81,177 16,874 125,256 88,737 4,787 0 40,847 2,555 6,957 (18,627)
1877 SHERBROOK PA 153,543 61,145 289,349 119,170 0 0 48,050 6,313 5,957 109,859
1880 ARAGON WOODS IN 117,958 24,177 190,659 99,202 0 0 44,547 3,785 4,455 38,670
1885 NEWBERRY II MI 72,950 27,904 157,106 119,806 0 0 21,573 7,152 (15,884) 24,459
1887 RIVER GLEN I OH 74,694 32,411 190,298 93,972 0 1,433 41,534 3,129 13,576 36,654
1889 APPLEGATE II IN 125,020 59,291 208,113 105,801 5,296 2,574 65,831 8,282 (10,003) 30,332
1895 ROSEWOOD COMMONS II IN 127,614 32,121 208,332 112,459 0 12,211 39,835 6,353 24,013 13,461
1898 RIDGEWOOD II IN 143,348 44,989 246,085 119,214 0 0 49,260 2,927 5,830 68,854
1908 CHERRY GLENN II IN 114,990 38,580 187,220 96,814 0 0 55,846 6,119 9,768 18,673
1909 LINDENDALE OH 110,453 33,769 222,051 122,773 0 15,459 57,795 7,581 44,265 (25,822)
1911 ELMTREE PARK II IN 91,000 24,258 139,234 106,979 0 0 37,128 2,383 3,351 (10,607)
1914 WOODLANDS II PA 113,842 34,207 198,194 98,799 0 0 43,509 12,708 4,344 38,834
1917 WILLOWOOD II IN 79,346 29,244 172,323 91,555 0 355 55,371 5,335 8,329 11,378
1935 RED DEER II OH 85,651 22,502 218,772 107,498 0 0 54,590 4,269 8,371 44,044
1936 SUFFOLK GROVE II OH 71,374 30,078 172,834 96,062 0 452 43,535 4,846 (16,844) 44,783
1937 THE WILLOWS III OH 66,234 25,339 128,517 73,901 3,696 0 32,511 815 (20,836) 38,430
1946 AMBERWOOD OH 124,794 22,555 135,908 73,695 21,077 14,623 36,276 4,106 4,909 (18,778)
1966 RIVER GLEN II OH 67,689 27,833 180,502 96,502 7,442 23,086 42,772 4,525 (10,171) 16,346
1982 MARABOU MILLS III IN 108,558 21,976 183,366 100,366 5,818 21,575 41,508 (4,763) (304) 19,166
1983 CAMBRIDGE COMMONS III IN 110,690 34,107 104,718 79,896 13,457 0 37,147 (509)(104,848) 79,575
1986 GARDEN CT MI 165,916 62,140 366,194 162,257 0 0 73,613 1,039 23,430 105,855
2137 WINDWOOD I FL 116,098 37,303 110,778 45,532 11,000 1,788 16,252 18,792 56,977 (39,563)
2208 GARDEN TERRACE I FL 106,986 28,004 109,564 51,124 0 19,608 38,168 11,758 42,825 (53,919)
2385 CANTERBURY CROSSINGS FL 150,918 60,572 281,957 202,324 17,418 0 20,684 13,458 31,824 (3,751)
2455 THYMEWOOD II FL 174,670 47,267 226,141 178,258 14,695 0 14,591 11,551 (3,518) 10,564
2462 FOREST GLEN FL 124,916 26,123 198,801 83,872 0 165 32,594 12,625 (3,474) 73,019
2469 BEL AIRE II FL 139,820 36,118 127,844 112,430 11,265 0 14,009 11,834 30 (21,724)
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
-----------------------------------------------------------------------------------------------------
Prop. Real Contractual Interest Major
Oper. Estate Net First Subord. Payable Depre. Maint. Non
& Taxes & Operating Mortgage Debt To & & Operating Net
Prop # Name State Maint. Insur. Income Interest Interest Lexford Amort Replace. Expenses Income
- ------------------------------------------------------------------------------------------------------------------------------------
RENTAL PROPERTIES
----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2479 HERON POINTE FL 200,273 48,161 225,797 137,893 6,922 0 59,199 32,170 (8,857) (1,530)
2482 OAKWOOD VILLAGE FL 151,612 29,602 134,925 68,855 0 2,348 9,528 10,753 3,991 39,450
2487 RIVERS END II FL 109,933 40,769 208,197 102,950 0 0 38,008 12,328 (2,365) 57,276
2501 WHISPERING PINES II FL 79,923 23,299 88,947 47,637 12,385 0 17,889 3,421 4,015 3,600
2512 SKY PINES II FL 94,534 28,817 137,462 91,900 0 21,210 32,612 12,189 (152,478) 132,029
2515 HIDDEN ACRES FL 164,388 54,556 249,586 141,011 6,821 9,454 24,987 36,591 (3,151) 33,873
2519 CENTRE LAKE III FL 560,681 130,720 737,822 431,965 0 3,009 130,290 25,631 47,616 99,311
2521 BLUEBERRY HILL I FL 124,135 32,539 181,831 67,443 0 0 13,620 4,797 5,334 90,637
2526 HOLLY SANDS II FL 87,177 24,746 165,908 88,692 4,472 558 46,786 12,145 (9,653) 22,908
2527 SUNSET WAY I FL 227,330 69,394 293,062 147,869 0 84,116 54,817 21,010 48,733 (63,483)
2530 PINE BARRENS FL 196,819 49,835 279,599 127,621 0 72 58,085 18,015 (4,240) 80,046
2535 PELICAN POINTE I FL 131,294 40,006 235,392 118,575 0 0 46,636 14,284 (3,610) 59,507
2537 CALIFORNIA GARDENS FL 134,136 33,004 134,002 103,658 21,039 0 13,855 52 3,652 (8,254)
2543 MIGUEL PL FL 152,196 34,845 201,720 123,507 8,386 0 42,067 16,816 (3,560) 14,504
2545 JUPITER COVE I FL 130,493 39,979 221,767 178,651 22,079 0 28,852 12,618 6,850 (27,283)
2546 PELICAN POINTE II FL 111,560 36,402 202,095 81,929 0 0 37,532 6,502 6,061 70,071
2547 MARK LANDING I FL 153,215 35,098 204,816 112,340 6,108 0 65,053 12,817 16,586 (8,088)
2549 JUPITER COVE III FL 127,737 38,586 233,257 117,882 14,120 0 36,732 13,219 5,923 45,381
2556 HILLSIDE TRACE FL 102,865 28,545 156,035 75,665 15,909 0 27,200 15,566 7,541 14,154
2559 JEFFERSON WAY I FL 114,886 23,204 157,975 88,686 5,042 0 55,622 10,638 (11,501) 9,488
2580 SUNSET WAY II FL 235,743 78,240 275,007 242,715 0 0 48,288 14,777 25,622 (56,395)
2587 OAK GARDENS FL 221,926 93,901 314,130 254,247 28,741 0 40,842 17,787 (27,033) (454)
3166 CEDAR HILL TN 139,017 27,209 222,646 124,287 6,196 0 46,430 5,050 6,866 33,817
3171 LAUREL GLEN GA 147,656 29,562 303,048 145,632 7,225 21,064 62,344 14,435 30,384 21,964
3173 SPRINGBROOK SC 160,004 45,578 222,513 138,539 14,139 192 72,589 10,295 (11,532) (1,709)
3174 LAKESHORE I GA 148,206 19,998 200,956 105,774 5,241 0 40,088 10,253 6,811 32,789
3175 GLENVIEW AL 143,181 24,781 203,863 126,340 0 0 53,448 3,768 4,412 15,895
3186 RAMBLEWOOD II GA 147,857 25,237 261,084 164,082 0 0 57,718 1,382 (1,050) 38,952
3188 VALLEYBROOK GA 91,476 21,880 277,231 141,544 0 0 51,250 3,086 13,077 68,274
3189 WILLOW LAKES SC 142,564 36,020 162,761 171,336 14,846 0 63,752 45 11,347 (98,565)
3190 GLENWOOD VILLAGE GA 140,177 35,590 181,635 129,285 0 0 22,280 8,843 4,412 16,815
3208 RAVENWOOD SC 136,152 34,983 219,836 128,445 0 0 48,693 5,422 16,346 20,930
3209 INDIAN LAKE I GA 424,768 114,520 842,254 394,736 0 0 163,069 5,430 14,511 264,508
3231 WALKER PL TX 128,772 44,062 133,155 79,672 0 7,522 37,200 10,732 (19,067) 17,096
3233 GREENBRIAR GLEN GA 138,815 38,266 265,561 142,740 0 6,727 53,599 3,014 (75,425) 134,906
3400 HATCHERWAY GA 94,678 24,559 108,437 88,817 3,490 3,429 39,588 1,646 3,030 (31,563)
3417 GLEN ARM MANOR GA 108,582 21,181 189,959 91,878 13,219 1,411 58,471 2,486 17,518 4,976
3480 MILL RUN GA 149,862 28,537 228,292 118,476 4,433 0 51,853 3,243 14,440 35,847
3486 STEWART WAY I GA 122,895 30,393 175,417 129,244 4,823 6,252 68,498 3,144 6,157 (42,701)
3494 WILCREST WOODS GA 134,065 25,848 202,703 98,834 3,688 4,507 51,974 13,779 4,893 25,028
3496 MARSHLANDING II GA 90,866 14,010 116,618 83,817 0 0 29,801 2,622 3,010 (2,632)
3522 STEWART WAY II GA 116,576 33,383 170,282 115,940 4,326 8,315 55,751 1,915 18,669 (34,634)
3532 KINGS COLONY GA 157,842 39,184 247,829 148,071 0 24,640 40,263 6,667 4,945 23,243
4109 CHERRY TREE MD 160,761 53,432 347,062 188,940 0 0 82,379 8,470 (583) 67,856
4111 FORSYTHIA CT II MD 148,135 32,847 208,275 228,689 0 0 48,080 13,173 5,262 (86,929)
4133 MERRIFIELD MD 177,422 52,660 278,459 190,098 0 23,843 78,237 5,429 6,196 (25,344)
5886 PICKERINGTON MEADOWS OH 95,692 23,314 188,972 97,835 6,271 29,391 44,589 4,579 2,849 3,458
5903 BRUNSWICK II WV 130,132 23,994 191,603 117,527 0 49,128 63,987 12,640 4,014 (55,693)
5906 AMESBURY II OH 107,647 45,280 157,557 116,663 0 50,282 66,951 5,561 3,500 (85,400)
5910 MARABOU MILLS II IN 111,282 24,196 197,015 88,415 0 824 42,669 3,248 9,028 52,831
5951 HARVEST GROVE II OH 83,832 29,395 157,112 98,493 0 36,462 44,938 7,032 (12,858) (16,955)
--------------------------------------------------------------------------------------------------
111 14,498,355 3,994,405 22,751,674 13,147,540 427,707 596,608 5,134,465 859,764 432,234 2,153,356
--------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
OTHER FINANCIAL INFORMATION (CASH BASIS)
----------------------------------------------------------------------------------------------------
Contractual
First Subordinated Distribution Excess
Capital Mortgage Debt to Limited Cash Flow
Prop # State Expenditures Principal Principal Partners To Lexford Investment
- ------------------------------------------------------------------------------------------------------------------------------------
RENTAL PROPERTIES
---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1005 ANNHURST III OH 50,596 30,547 0 0 0 0
1039 LAUREL BAY MI 8,953 20,710 0 0 61,549 0
1375 RIVERVIEW ESTATES OH 21,826 17,812 0 0 0 0
1377 APPLE RIDGE I OH 25,371 0 7,553 0 17,816 0
1389 THE WILLOWS I OH 13,692 12,422 0 0 0 0
1439 MONTROSE SQUARE OH 25,587 34,424 (4,412) 0 0 0
1542 SPRINGWOOD KY 8,466 11,612 0 0 7,624 0
1620 MEADOWOOD OH 9,593 5,334 16,161 0 0 0
1672 RIDGEWOOD ELHART IN 8,200 15,779 0 0 22,299 0
1690 HEATHMOORE I MI 25,865 0 11,420 0 50,509 0
1750 CEDARWOOD II KY 28,388 0 7,262 0 3,201 0
1780 BRUNSWICK IL 16,323 12,081 20,431 0 6,892 (22,363)
1786 SPICEWOOD IN 25,644 0 7,374 0 4,040 0
1806 WINTHROP CT II OH 17,010 0 5,387 0 13,579 0
1809 MEADOWOOD II IN 17,852 15,941 0 0 0 0
1810 ACADIA CT II IN 18,498 24,128 0 0 79,065 0
1814 ASHFORD HILL OH 48,105 8,585 0 0 9,992 (312,110)
1816 CEDARWOOD III KY 7,498 11,369 0 0 17,397 0
1822 MARABOU MILLS I IN 13,381 17,082 0 0 130,027 0
1823 ELMTREE PARK I IN 9,171 23,109 0 0 61,533 0
1824 AMESBURY I OH 22,681 0 8,950 0 4,753 0
1825 BRADFORD PL IL 10,444 7,853 0 0 21,917 0
1830 SHERBROOK IN 32,217 23,065 0 0 19,017 0
1833 HAYFIELD PARK KY 41,264 0 11,485 0 90,983 0
1838 CEDARGATE II KY 26,454 11,820 0 0 33,930 0
1839 DARTMOUTH PL II OH 15,782 18,810 0 0 32,432 0
1841 WILLOWOOD II OH 9,183 13,248 0 0 30,489 0
1843 DOGWOOD GLEN I IN 15,063 0 12,752 0 64,217 0
1846 CHERRY GLEN I IN 15,083 26,293 0 0 12,057 0
1853 FOXHAVEN OH 11,295 24,269 0 0 77,008 0
1859 ANNHURST II OH 43,349 14,197 1,529 0 0 0
1863 HUNTER GLEN IL 8,529 28,896 0 0 47,717 0
1869 HARVEST GROVE I OH 4,741 24,564 0 0 56,164 0
1871 CLEARWATER OH 20,042 0 7,548 0 17,844 0
1877 SHERBROOK PA 12,950 36,163 0 0 77,247 0
1880 ARAGON WOODS IN 12,454 13,987 0 0 69,854 0
1885 NEWBERRY II MI 5,844 17,713 17,639 0 0 0
1887 RIVER GLEN I OH 10,341 36,931 0 0 18,525 0
1889 APPLEGATE II IN 10,288 0 9,000 0 75,603 0
1895 ROSEWOOD COMMONS II IN 26,039 37,942 0 0 38,132 0
1898 RIDGEWOOD II IN 11,831 29,229 0 0 101,442 0
1908 CHERRY GLENN II IN 15,659 27,535 0 0 49,885 0
1909 LINDENDALE OH 27,436 17,610 0 0 36,382 0
1911 ELMTREE PARK II IN 9,369 9,466 0 0 1,785 0
1914 WOODLANDS II PA 20,422 20,910 0 0 46,577 0
1917 WILLOWOOD II IN 42,783 5,249 0 0 48,197 (20,149)
1935 RED DEER II OH 10,825 26,438 0 0 59,911 0
1936 SUFFOLK GROVE II OH 12,563 14,022 0 0 40,186 0
1937 THE WILLOWS III OH 5,284 0 6,290 0 61,760 0
1946 AMBERWOOD OH 10,388 0 6,467 0 13,969 0
1966 RIVER GLEN II OH 3,935 0 8,426 0 54,221 0
1982 MARABOU MILLS III IN 30,972 0 8,579 0 38,401 0
1983 CAMBRIDGE COMMONS III IN 23,322 11,360 0 0 0 (1,200,000)
1986 GARDEN CT MI 16,678 22,299 0 0 153,243 0
2137 WINDWOOD I FL 24,788 5,403 1,217 0 0 0
2208 GARDEN TERRACE I FL 59,034 8,589 0 0 23,589 0
2385 CANTERBURY CROSSINGS FL 9,360 14,387 71,168 0 0 0
2455 THYMEWOOD II FL 16,512 18,647 18,584 0 0 0
2462 FOREST GLEN FL 17,840 17,851 0 0 74,024 0
2469 BEL AIRE II FL 7,149 12,736 1,352 0 0 0
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
OTHER FINANCIAL INFORMATION (CASH BASIS)
----------------------------------------------------------------------------------------------------
Contractual
First Subordinated Distribution Excess
Capital Mortgage Debt to Limited Cash Flow
Prop # State Expenditures Principal Principal Partners To Lexford Investment
- -----------------------------------------------------------------------------------------------------------------------------
RENTAL PROPERTIES
---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2479 HERON POINTE FL 42,037 0 11,736 0 12,806 0
2482 OAKWOOD VILLAGE FL 26,493 9,352 0 0 38,681 0
2487 RIVERS END II FL 20,100 14,923 0 0 81,791 0
2501 WHISPERING PINES II FL 8,800 6,151 4,985 0 0 0
2512 SKY PINES II FL 26,185 10,835 0 0 10,532 0
2515 HIDDEN ACRES FL 30,161 0 11,992 0 16,730 0
2519 CENTRE LAKE III FL 61,865 62,828 0 0 39,120 0
2521 BLUEBERRY HILL I FL 37,840 9,782 0 0 59,502 0
2526 HOLLY SANDS II FL 39,224 0 7,560 0 35,784 0
2527 SUNSET WAY I FL 27,225 20,107 0 0 111,066 0
2530 PINE BARRENS FL 24,915 21,584 0 0 97,555 0
2535 PELICAN POINTE I FL 23,771 17,181 0 0 84,122 0
2537 CALIFORNIA GARDENS FL 11,725 11,337 3,561 0 0 0
2543 MIGUEL PL FL 14,504 0 10,699 0 0 0
2545 JUPITER COVE I FL 9,439 14,298 65,642 0 0 0
2546 PELICAN POINTE II FL 27,156 14,944 0 0 52,338 0
2547 MARK LANDING I FL 25,335 0 9,520 0 38,449 0
2549 JUPITER COVE III FL 8,444 16,403 51,901 0 0 0
2556 HILLSIDE TRACE FL 5,764 8,137 2,980 0 49,538 0
2559 JEFFERSON WAY I FL 11,919 0 7,494 0 0 0
2580 SUNSET WAY II FL 24,364 25,528 0 0 0 0
2587 OAK GARDENS FL 10,566 30,458 18,015 0 0 0
3166 CEDAR HILL TN 43,030 0 10,584 0 68,649 0
3171 LAUREL GLEN GA 50,552 0 12,392 0 71,753 0
3173 SPRINGBROOK SC 19,348 0 12,395 0 157,010 0
3174 LAKESHORE I GA 36,815 0 9,005 0 58,796 0
3175 GLENVIEW AL 11,948 25,615 0 0 0 0
3186 RAMBLEWOOD II GA 12,359 65,587 0 0 0 0
3188 VALLEYBROOK GA 38,062 18,497 0 0 120,229 0
3189 WILLOW LAKES SC 8,820 0 14,930 0 24,146 0
3190 GLENWOOD VILLAGE GA 8,820 15,988 0 0 32,983 0
3208 RAVENWOOD SC 7,531 46,177 0 0 40,743 0
3209 INDIAN LAKE I GA 29,213 153,757 0 0 172,348 0
3231 WALKER PL TX 0 15,294 0 0 0 0
3233 GREENBRIAR GLEN GA 4,509 18,669 0 0 119,289 0
3400 HATCHERWAY GA 10,582 6,402 0 0 0 0
3417 GLEN ARM MANOR GA 25,377 11,629 21,767 0 15,883 (91,351)
3480 MILL RUN GA 70,545 8,604 0 0 41,381 0
3486 STEWART WAY I GA 50,198 9,361 0 0 1,610 0
3494 WILCREST WOODS GA 53,317 7,159 0 0 49,235 0
3496 MARSHLANDING II GA 12,140 9,220 0 0 0 0
3522 STEWART WAY II GA 41,639 8,398 0 0 1,180 0
3532 KINGS COLONY GA 17,690 8,762 0 0 20,720 0
4109 CHERRY TREE MD 41,496 63,655 0 0 27,902 0
4111 FORSYTHIA CT II MD 14,337 29,039 0 0 0 0
4133 MERRIFIELD MD 20,622 24,764 0 0 55,485 0
5886 PICKERINGTON MEADOWS OH 12,718 0 8,440 0 40,772 0
5903 BRUNSWICK II WV 18,095 17,307 0 0 18,142 0
5906 AMESBURY II OH 24,999 17,159 0 0 0 0
5910 MARABOU MILLS II IN 8,421 21,607 0 0 48,085 0
5951 HARVEST GROVE II OH 14,735 14,507 0 0 20,175 0
--------------------------------------------------------------------------------------
111 2,355,962 1,769,422 557,760 0 4,011,514 (1,645,973)
--------------------------------------------------------------------------------------
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
----------------------------------------------------------------------------------------------
Laundry
Vending
Rent Interest Security & Other Net
Prop # Name State Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
- ------------------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS (1)
----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1109 DOGWOOD TERRACE OH (2) 110 518,627 19,223 4,543 8,818 (49,078) (8,508) 493,625
1112 LONDON LAMPLIGHT OH (2) 53 236,975 2,129 2,609 6,095 (24,783) (10,545) 212,480
1123 SPRINGFIELD WOODGATE OH 39 149,011 1,031 2,544 1,520 (9,248) (2,621) 142,237
1262 THE BIRCHES OF LIMA OH (2) 58 247,772 1,106 4,041 2,201 (28,787) (1,015) 225,318
1297 PLUMWOOD OH 109 523,188 4,480 4,138 5,858 (45,884) (5,025) 486,755
1310 MELDON PLACE OH (2) 127 570,633 7,678 5,391 13,872 (24,924) (150) 572,500
1320 WEST OF EASTLAND OH (2) 124 549,509 3,426 6,147 15,189 (48,143) (18,048) 508,080
1322 PARKVILLE OH (2) 100 471,927 4,534 4,871 11,780 (29,760) (8,659) 454,693
1327 CHARING CROSS OH (2) 67 289,880 1,828 2,268 7,562 (15,786) 505 286,257
1329 INDEPENDENCE VILLAGE OH (2) 124 571,423 2,469 3,804 9,011 (70,097) (11,140) 505,470
1330 POPLAR CT OH 61 274,781 3,813 3,390 5,306 (19,484) 39 267,845
1341 GREENLEAF OH 49 165,000 107 2,670 137 0 0 167,914
1344 LAUREL CT FREMONT OH (2) 69 292,647 631 3,477 5,563 (19,347) (1,129) 281,842
1379 AMHURST OH 73 331,797 2,487 4,097 6,300 (22,759) (5,877) 316,045
1404 KETWOOD OH 94 453,349 4,138 6,599 8,079 (16,073) (3,265) 452,827
1437 HICKORY MILL OH 60 310,580 3,306 2,109 6,192 (22,757) 1,909 301,339
1455 MONTROSE SQ II OH 64 253,864 2,275 3,496 2,751 (4,499) 385 258,272
1456 APPLE RIDGE CIRCLEVILLE II OH 53 227,320 3,122 4,431 7,981 (26,543) (964) 215,347
1460 WESTWOOD NEWARK OH (2) 13 56,365 793 610 529 (5,933) (508) 51,856
1461 APPLE RUN II OH (2) 50 235,762 1,235 1,822 3,312 (12,428) (5,902) 223,801
1462 PLUMWOOD CHESTERFIELD IN (2) 39 184,411 3,254 3,166 2,566 (14,266) (2,095) 177,036
1464 GREENGLEN WHEELERSBURG OH 68 257,740 3,444 3,365 9,528 (10,507) (2,457) 261,113
1465 CEDARWOOD BELPRE OH (2) 44 187,677 1,907 1,600 1,736 (27,088) 296 166,128
1466 AMHURST DAYTON II OH 74 341,494 2,272 6,590 5,504 (30,631) (5,440) 319,789
1469 CHELSEA CT SANDUSKY OH 62 299,699 2,365 3,448 2,629 (29,222) (2,193) 276,726
1470 MILLSTON ABERDEEN OH (2) 54 186,750 1,859 1,669 2,371 (16,606) 22 176,065
1473 MILLBURN DAYTON II OH (2) 51 265,796 4,820 2,625 1,329 (19,573) (1,349) 253,648
1483 WOODBINE PORTSMOUTH OH (2) 41 168,233 2,291 1,475 1,908 (7,854) (553) 165,500
1485 HAMPSHIRE ELYRIA II OH (2) 56 268,143 4,884 3,640 12,738 (25,240) (6,988) 257,177
1489 PLUMWOOD FT. WAYNE IN (2) 55 255,900 2,613 2,494 5,983 (11,241) (1,337) 254,412
1491 CAMELLIA CT OH (2) 40 181,584 1,058 1,285 1,557 (11,496) (2,436) 171,552
1499 CONCORD SQ ONTARIO OH (2) 41 192,817 2,626 1,944 (598) (7,695) 44 189,138
1505 CAMELLIA CT DAYTON OH (2) 58 282,369 4,865 2,469 2,165 (27,189) (543) 264,136
1510 BECKFORD PLACE OH (2) 40 167,634 582 1,947 1,789 (4,950) (624) 166,378
1511 APPLEGATE CHILLICOTHE II OH (2) 41 180,430 3,543 2,027 1,434 (27,640) (5,057) 154,737
1512 SPRINGWOOD NEW HAVEN IN (2) 48 236,870 2,676 1,662 4,132 (17,938) (3,670) 223,732
1516 THE WILLOWS DELAWARE II OH (2) 41 197,205 3,195 5,107 2,999 (9,835) (4,570) 194,101
1519 GREENGLEN ALLEN II OH (2) 54 237,422 3,951 3,736 2,973 (25,896) (1,381) 220,805
1523 LARKSPUR MORAINE OH (2) 29 136,202 741 2,148 5,294 (8,550) (2,609) 133,226
1524 MILLSTON ABERDEEN II OH (2) 39 137,605 1,659 471 2,063 (9,787) (349) 131,662
1526 CAMELLIA CT OH 64 322,785 2,450 1,491 1,576 (12,010) (1,844) 314,448
1527 WOODBINE CUYAHOGA FALLS OH 55 318,298 3,234 1,944 2,924 (7,931) 907 319,376
1528 APPLEGATE LORDSTOWN OH (2) 39 192,265 1,414 495 1,940 (5,960) (308) 189,846
1529 PARKVILLE ENGLEWOOD OH 48 236,788 2,381 1,723 (953) (4,584) (68) 235,287
1530 CEDARWOOD SABINA OH (2) 31 145,668 1,598 1,626 1,952 (19,471) (9,552) 121,821
1531 ANDOVER CT MT. VERNON OH (2) 51 256,794 2,397 1,992 719 (1,154) 555 261,303
1533 HAMPSHIRE BLUFFTON IN (2) 45 206,884 975 1,676 4,141 (11,174) (695) 201,807
1534 CONCORD SQ IN (2) 48 230,808 2,554 3,554 1,655 (5,033) (3,040) 230,498
1535 GREENGLEN II OH (2) 59 274,854 2,760 3,937 4,208 (12,560) (3,576) 269,623
1539 FOXTON SEYMOUR IN 39 188,384 529 617 1,997 (31,335) (1,913) 158,279
1540 DARTMOUTH PLACE KENT OH (2) 53 310,259 2,976 2,674 3,177 (22,700) (4,953) 291,433
1549 CAMELLIA CT DAYTON II OH (2) 53 262,359 1,565 1,971 3,435 (23,038) (627) 245,665
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
----------------------------------------------------------------------------------------------
Laundry
Vending
Rent Interest Security & Other Net
Prop # Name State Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
- ------------------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS (1)
----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1550 APPLEGATE IN 58 307,997 3,065 1,950 1,488 (10,483) 218 304,235
1553 APPLE RIDGE CIRCLEVILLE III OH (2) 30 134,377 1,293 1,195 1,546 (3,306) (353) 134,752
1554 SPRINGWOOD AUSTINTOWN II OH (2) 43 207,619 991 893 3,763 (21,992) (1,157) 190,117
1555 DOVER PLACE EASTLAKE OH 64 382,293 4,166 769 5,409 (9,195) 703 384,145
1556 PARKVILLE PARKERSBURG WV (2) 49 223,097 1,444 2,250 297 (10,506) (102) 216,480
1557 HARTWICK TIPTON IN (2) 44 229,232 2,882 2,288 3,893 (16,605) (543) 221,147
1558 BECKFORD PLACE THE PLAINS OH 60 305,750 4,892 1,447 2,942 (9,046) 0 305,985
1559 LARKSPUR OH 60 336,882 2,894 2,925 3,107 (26,094) 960 320,674
1560 SPRINGWOOD OH 64 318,088 491 1,990 3,431 (28,660) (3,850) 291,490
1561 PARKVILLE GAS CITY IN (2) 49 233,013 5,049 3,155 5,649 (17,408) (1,597) 227,861
1562 CAMELLIA CT CARROLLTON KY (2) 55 238,146 1,822 3,526 3,902 (2,682) (2,606) 242,108
1563 FOXTON DAYTON II OH (2) 79 394,006 2,535 9,646 4,449 (31,984) (10,352) 368,300
1566 APPLE RUN HILLSDALE MI (2) 39 195,876 2,108 82 1,102 (6,559) (254) 192,355
1567 PINE GROVE ROSEVILLE MI 50 295,156 4,352 300 3,940 (15,657) (4,188) 283,903
1568 ASHGROVE FRANKLIN OH (2) 63 311,523 5,502 4,149 2,668 (20,109) 199 303,932
1569 MEADOWOOD JACKSON MI 47 250,785 3,720 190 5,887 (4,067) 1,274 257,789
1572 CONCORD SQ KOKOMO IN (2) 49 265,214 1,955 1,237 1,920 (21,332) 358 249,352
1573 SANDALWOOD ALEXANDRIA IN 44 211,808 3,461 840 1,818 (24,549) (1,406) 191,972
1574 AMHURST OH 58 292,564 1,909 1,056 2,239 (5,989) 206 291,985
1575 HAMPSHIRE WILLIAMSTOWN KY 32 128,670 2,103 370 632 (8,438) (1,200) 122,137
1576 MEADOWOOD MANSFIELD OH (2) 49 234,843 619 1,465 164 (6,763) (124) 230,204
1577 HICKORY MILL HURRICANE WV (2) 48 237,060 5,252 1,666 5,961 (16,181) (322) 233,436
1579 MEADOWOOD FRANKLIN IN (2) 51 290,604 2,925 4,026 7,512 (12,111) (4,473) 288,483
1581 CEDARWOOD GOSHEN IN 43 202,596 2,566 1,576 7,961 (5,909) (596) 208,194
1582 CONCORD SQ ONTARIO II OH (2) 31 141,690 304 3,095 493 (8,847) (461) 136,274
1583 MEADOWOOD CRAWFORDSVILLE IN (2) 64 323,074 1,617 1,701 9,209 (31,766) (3,175) 300,660
1585 BECKFORD PLACE OH 60 317,989 3,160 590 13 (19,026) (3,581) 299,145
1588 PLUMWOOD III OH 34 178,407 2,200 1,270 1,984 (3,397) (980) 179,484
1589 WOODLANDS OH (2) 88 467,155 1,770 2,065 4,950 (45,047) (4,186) 426,707
1590 WOODLANDS FRANKLIN KY (2) 56 229,122 956 2,922 3,700 (21,676) (2,186) 212,838
1591 MEADOWOOD FLATWOODS KY (2) 52 229,633 3,459 501 3,595 (22,090) 100 215,198
1592 GREENGLEN DAYTON OH (2) 76 375,578 2,583 6,883 5,435 (10,687) (7,064) 372,728
1593 ASHGROVE IN (2) 57 325,812 4,012 5,907 7,885 (22,600) (5,143) 315,873
1595 MEADOWOOD NICHOLASVILLE KY (2) 67 331,479 6,407 3,237 5,832 (6,396) 835 341,394
1596 STONEHENGE RICHMOND IN (2) 59 311,205 4,041 2,275 6,486 (6,297) 1,886 319,596
1597 WILLOWOOD IN 51 271,674 3,066 1,600 3,973 (9,594) (70) 270,649
1598 CEDARGATE KY (2) 59 290,373 2,791 3,077 5,323 (21,349) 1,667 281,882
1599 WILLOW RUN WILLARD OH (2) 61 247,506 2,809 2,512 6,540 (15,969) (2,579) 240,819
1600 HEATHMOORE JEFFERSON KY (2) 62 303,355 2,847 655 5,540 (7,840) 1,230 305,787
1601 STONEHENGE GLASGOW KY (2) 54 222,860 1,562 4,049 292 (7,376) (290) 221,097
1602 HEATHMOORE IN (2) 55 300,943 4,692 1,758 10,542 (53,759) (3,177) 260,999
1603 APPLE RUN TRUMBULL OH (2) 48 241,409 1,075 2,137 7,974 (24,907) (6,448) 221,240
1604 FOXTON MONROE MI (2) 51 284,554 2,635 3,468 3,100 (5,871) (2,232) 285,654
1605 ASHGROVE CALHOUN MI (2) 51 264,369 2,479 1,163 1,458 (12,208) (1,732) 255,529
1606 STONEHENGE OTTAWA OH (2) 36 159,202 1,407 1,077 3,565 (5,970) 1,878 161,159
1613 WOODLANDS ZELIENOPLE PA 50 298,141 4,329 2,397 6,324 (13,265) (73) 297,853
1615 RIDGEWOOD WESTLAND MI 56 355,121 3,200 1,861 3,151 (18,418) (3,164) 341,751
1616 HEATHMOORE MACOMB MI (2) 72 410,006 3,098 1,753 8,760 (23,739) (5,787) 394,091
1617 DOVER PLACE EASTLAKE II OH 65 377,608 4,397 990 7,504 (23,546) 423 367,376
1618 DOVER PLACE EASTLAKE III OH 30 179,994 2,340 1,171 1,815 (4,075) (2,164) 179,081
1619 CEDARGATE MICHIGAN CITY IN (2) 53 262,462 5,160 2,725 6,505 (21,278) (962) 254,612
1622 CEDARGATE BLOOMINGTON IN 68 404,370 9,994 2,530 8,056 (52,637) (363) 371,950
1623 CEDARGATE OH (2) 47 205,608 1,712 478 4,014 (14,935) 638 197,515
1624 STONEHENGE JEFFERSON KY (2) 61 310,841 4,072 385 3,919 (6,603) (1,747) 310,867
1626 SLATE RUN IN 90 501,731 6,130 1,300 10,333 (9,266) (1,365) 508,863
1630 SANDALWOOD OH (2) 50 255,534 3,451 1,861 8,254 (9,942) (410) 258,748
1635 RIDGEWOOD OH (2) 60 326,228 5,415 443 3,636 (20,916) (131) 314,675
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
----------------------------------------------------------------------------------------------
Laundry
Vending
Rent Interest Security & Other Net
Prop # Name State Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
- ------------------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS (1)
----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1637 APPLEGATE DELAWARE IN (2) 53 288,051 3,947 2,349 5,563 (24,010) (25) 275,875
1638 MEADOWOOD LOGANSPORT IN (2) 42 198,036 792 2,340 3,563 (1,478) (1,946) 201,307
1639 SLATE RUN LEBANON IN (2) 61 328,729 4,470 995 4,734 (28,513) (245) 310,170
1640 WESTWOOD ROCHESTER IN (2) 42 188,920 425 3,637 4,825 (14,102) (8,096) 175,609
1641 WILLOWOOD WOOSTER OH (2) 51 247,433 2,362 3,078 5,292 (16,154) (1,476) 240,535
1642 STONEHENGE STARK OH (2) 60 291,377 2,790 3,820 5,939 (16,557) (7,454) 279,915
1644 RIDGEWOOD LEXINGTON KY 62 333,726 4,548 1,965 4,870 (8,415) (1,136) 335,558
1645 RIDGEWOOD BEDFORD IN (2) 48 232,255 2,614 1,967 3,855 (11,560) (1,510) 227,621
1646 CAMELLIA CT II OH (2) 40 206,372 3,629 678 2,838 (3,720) (655) 209,142
1647 CEDARGATE ENGLEWOOD OH (2) 61 316,507 4,170 1,223 6,487 (9,812) 16 318,591
1648 SLATE RUN HOPKINSVILLE KY (2) 57 262,787 3,031 2,267 5,024 (32,206) (2,913) 237,990
1649 WILLOWOOD GROVE CITY OH (2) 46 253,749 3,620 1,467 3,166 (16,711) 1,866 247,157
1650 MEADOWOOD OH (2) 60 311,805 4,272 1,182 6,726 (19,771) 280 304,494
1651 STONEHENGE IN (2) 60 332,009 4,427 718 10,033 (18,714) (4,605) 323,868
1652 MEADOWOOD WARRICK IN (2) 65 290,286 587 1,867 3,707 (31,122) (328) 264,997
1653 WILLOWOOD EAST IN 59 316,080 719 916 7,803 (46,989) (808) 277,721
1655 CEDARGATE SHELBY KY (2) 58 299,164 1,850 2,388 5,123 (21,066) (3,647) 283,812
1656 RIDGEWOOD RUSSELVILLE KY (2) 52 227,770 1,889 1,355 2,973 (39,642) 2,191 196,536
1657 WILLOW RUN NEW ALBANY IN (2) 64 340,253 8,769 2,217 3,973 (5,334) 2,518 352,396
1658 ASHGROVE JEFFERSON KY (2) 60 313,125 4,983 1,921 3,850 (8,978) (543) 314,358
1659 SLATE RUN JEFFERSON KY (2) 65 325,679 3,374 3,534 6,449 (9,312) (2,330) 327,394
1660 MEADOWOOD LEXINGTON KY (2) 50 251,635 1,679 1,057 5,156 (31,554) (3,050) 224,923
1661 FORSYTHIA CT OH 60 320,393 3,565 826 5,396 (9,454) (869) 319,857
1663 WATERBURY GREENWOOD IN (2) 44 252,242 3,027 672 6,132 (17,242) (2,620) 242,211
1664 SLATE RUN BARDSTOWN KY (2) 54 224,208 2,592 1,614 4,520 (9,478) (141) 223,315
1666 WILLOWOOD FRANKFORT KY (2) 57 276,022 3,151 2,356 2,409 (20,290) (4,654) 258,994
1667 BECKFORD PLACE NEW CASTLE IN (2) 41 204,798 2,588 2,499 3,700 (7,843) (1,269) 204,473
1669 WILLOWOOD OWENSBORO KY (2) 55 222,389 680 390 7,525 (16,080) 1,451 216,355
1670 STONEHENGE MONTGOMERY OH (2) 69 350,756 2,394 3,972 5,537 (13,012) (3,604) 346,043
1671 LARKSPUR MORAINE II OH (2) 16 69,891 342 68 (1,268) (1,335) 0 67,698
1673 SLATE RUN BEDFORD OH 62 398,862 1,142 3,416 5,554 (21,374) (1,765) 385,835
1674 ROSEWOOD JEFFERSON KY (2) 77 438,913 4,796 3,120 3,628 (27,454) (832) 422,171
1676 MILLBURN STOW OH (2) 52 349,086 2,246 1,453 5,003 (16,174) (625) 340,989
1677 WILLOW RUN MADISONVILLE KY (2) 71 318,688 4,155 3,407 3,275 (19,673) 839 310,691
1678 CEDARWOOD GOSHEN II IN 47 224,456 934 2,012 3,807 (5,521) (365) 225,323
1679 HEATHMOORE EVANSVILLE IN (2) 74 347,432 2,672 2,173 4,500 (20,881) 1,999 337,895
1681 FOREST PARK MEADOWOOD OH 106 592,297 6,935 3,655 7,374 (7,970) (4,440) 597,851
1682 STONEHENGE TECUMSEH MI (2) 48 278,398 4,310 220 3,440 (15,268) 1,758 272,858
1683 BRANDON CT BLOOMINGTON IN (2) 78 449,899 4,591 934 10,529 (78,426) 3,010 390,537
1686 ASHGROVE MI (2) 115 711,106 1,740 1,865 10,515 (43,765) (1,955) 679,506
1687 MONTGOMERY CT INGHAM MI (2) 59 333,294 4,463 3,408 5,416 (16,112) (5,349) 325,120
1691 PINE GROVE ROSEVILLE II MI 33 196,898 2,287 254 1,558 (4,302) (3,552) 193,143
1692 MEADOWOOD MONROE MI (2) 57 303,675 2,634 693 3,259 (5,459) 1 304,803
1695 ANNHURST IN (2) 83 427,066 4,037 3,786 11,534 (41,770) (5,833) 398,820
1696 ANNHURST ALLEGHENY PA (2) 97 619,374 6,841 2,793 2,977 (29,283) (5,243) 597,459
1698 WOODLANDS STREETSBORO OH (2) 60 363,648 4,504 2,721 8,099 (19,150) (758) 359,064
1699 ROANOKE OAKLAND MI (2) 88 643,180 6,612 1,708 7,627 (24,681) 755 635,201
1700 DANIEL CT CLERMONT OH (2) 114 589,149 3,598 4,358 11,918 (31,741) (7,320) 569,962
1703 BARRINGTON BEDFORD OH 80 505,360 3,788 1,106 9,140 (34,774) (2,189) 482,431
1704 MULBERRY HILLIARD OH 60 333,582 1,269 2,524 6,389 (8,288) (650) 334,826
1705 WOODLANDS II OH (2) 70 365,905 2,732 1,203 8,230 (35,838) 451 342,683
1707 LARKSPUR II OH 61 345,605 4,849 1,732 6,371 (25,968) 2,239 334,828
1714 NEWBERRY EATON MI (2) 62 334,819 3,139 545 5,165 (14,032) (743) 328,893
1717 HICKORY MILL HURRICANE II WV 44 221,658 4,728 1,585 3,282 (10,437) (4) 220,812
1718 MEADOWOOD II OH (2) 23 119,747 1,452 1,970 2,117 (6,414) (3,551) 115,321
1719 VALLEYFIELD LEXINGTON KY (2) 83 442,370 4,609 5,150 5,838 (16,345) (1,690) 439,932
1720 RIDGEWOOD II OH (2) 58 320,061 5,145 852 2,464 (25,078) 90 303,534
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
----------------------------------------------------------------------------------------------
Laundry
Vending
Rent Interest Security & Other Net
Prop # Name State Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
- ------------------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS (1)
----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1721 OLIVEWOOD IN (2) 62 336,754 3,823 1,391 10,875 (25,774) (976) 326,093
1723 ROANOKE JEFFERSON KY 64 337,002 2,118 2,357 5,990 (6,400) (1,233) 339,834
1724 MEADOWOOD CUYAHOGA FALLS OH (2) 59 353,979 3,533 2,182 7,364 (35,895) (1,064) 330,099
1725 RIDGEWOOD LEXINGTON II KY 51 275,872 2,164 2,517 2,803 (9,682) (259) 273,415
1726 STONEHENGE JASPER IN (2) 40 167,104 1,074 2,839 4,123 (4,652) 290 170,778
1727 CARLETON CT KANAWHA WV (2) 73 365,031 2,519 1,801 8,287 (13,089) (1,905) 362,644
1728 NEWBERRY GROVE CITY PA 52 277,211 3,979 2,168 6,852 (11,410) 364 279,164
1729 BECKFORD PLACE II OH (2) 60 319,812 2,264 648 (2,997) (11,938) (1,133) 306,656
1730 NORTHRUP CT ALLEGHENY PA (2) 60 378,657 5,815 3,660 8,521 (25,323) 1,216 372,546
1731 FORSYTHIA CT JEFFERSON KY (2) 98 487,797 1,511 4,558 5,519 (19,543) (1,960) 477,882
1732 WINTHROP CT FRANKFURT KY (2) 77 372,088 1,005 5,426 3,962 (39,740) (1,352) 341,389
1733 PRINCETON CT EVANSVILLE IN (2) 62 306,474 772 1,950 5,715 (14,616) (1,709) 298,586
1735 ROSEWOOD OH (2) 90 450,024 5,007 248 7,003 (39,255) (2,077) 420,950
1737 SLATE RUN JEFFERSON II KY (2) 63 313,225 4,669 2,285 6,377 (7,276) (344) 318,936
1741 WILLOWOOD TROTWOOD OH 60 270,091 4,196 2,711 3,319 (6,512) (2,973) 270,832
1744 BRUNSWICK TRUMBULL OH 59 317,518 8,699 5,399 8,294 (15,353) (4,979) 319,578
1745 WYCLIFFE CT TN (2) 63 321,698 1,295 2,823 4,079 (4,943) (1,329) 323,623
1747 SLATE RUN MIAMISBURG OH (2) 48 253,589 1,904 2,674 4,496 (2,145) 469 260,987
1748 MONTGOMERY CT OH (2) 60 335,294 5,254 1,006 10,574 (18,320) (5,516) 328,292
1749 WATERBURY CLARKSVILLE TN (2) 54 270,327 1,341 1,573 3,702 (19,556) 282 257,669
1751 WINTHROP CT OH 62 321,635 6,119 911 4,757 (11,284) (54) 322,084
1752 PICKERINGTON MEADOWS OH (2) 60 288,582 2,934 1,270 5,692 (12,412) 654 286,720
1756 WATERBURY CLERMONT OH (2) 70 376,667 3,130 2,193 5,486 (13,678) (1,145) 372,653
1757 WILLOWOOD GROVE CITY II OH (2) 26 143,121 2,243 1,713 2,506 (9,375) (5,663) 134,545
1758 CEDARGATE BLOOMINGTON II IN (2) 58 341,196 3,265 2,477 6,087 (41,007) (1,427) 310,591
1759 ACADIA CT BLOOMINGTON IN (2) 97 570,010 4,454 3,898 12,775 (34,974) 4,118 560,281
1760 WILLOWOOD EAST II IN (2) 60 291,911 2,164 1,006 4,998 (63,173) (2,324) 234,582
1761 SHERBROOK OH (2) 60 288,993 1,991 686 3,435 (11,962) (913) 282,230
1762 LONGWOOD LEXINGTON KY (2) 60 298,973 3,633 3,131 4,590 (11,301) (1,762) 297,264
1763 NORTHRUP CT ALLEGHENY II PA (2) 49 308,028 5,556 3,209 4,433 (17,323) (1,365) 302,538
1765 LAURELWOOD CT BEDFORD IN (2) 50 231,479 2,985 2,841 1,855 (16,573) 2,377 224,964
1768 CARLETON CT ANN ARBOR MI 104 685,247 4,927 500 6,285 (33,642) (1,673) 661,644
1770 ALLEGHENY CO. VALLEYFIELD PA (2) 77 535,662 4,260 4,648 4,505 (10,655) (381) 538,039
1772 WENTWORTH ROSEVILLE MI (2) 75 447,424 2,285 5,445 5,212 (14,008) (5,037) 441,321
1773 WATERBURY WESTLAND MI (2) 100 635,225 5,309 2,361 4,447 (43,533) (9,413) 594,396
1777 HEATHMOORE II IN 80 415,619 2,135 4,092 8,641 (69,487) (9,250) 351,750
1779 AMBERIDGE ROSEVILLE MI (2) 45 273,372 1,185 1,962 3,419 (8,489) (7,265) 264,184
1783 WOODLANDS STREETSBORO II OH (2) 60 363,572 4,491 4,636 4,781 (30,348) (3,339) 343,793
1785 CARLETON CT ERIE PA (2) 60 313,229 1,004 1,390 4,388 (32,479) (290) 287,242
1787 ROSEWOOD COMMONS IN (2) 96 460,109 1,074 1,322 11,541 (34,737) (3,025) 436,284
1790 WILLOWOOD FRANKFORT II KY (2) 53 246,125 2,069 3,985 (110) (31,737) (3,041) 217,291
1794 ANNHURST OH 56 273,212 880 99 4,722 (11,580) (2,705) 264,628
1799 BEREA TABOR RIDGE OH 97 550,047 5,302 3,341 699 (49,236) (1,050) 509,103
1801 WILLOWOOD WOOSTER II OH (2) 53 241,167 3,668 10,476 3,279 (30,658) (11,738) 216,194
1804 CAMBRIDGE COMMONS IN (2) 86 410,996 3,229 2,660 11,884 (31,017) (5,987) 391,765
1805 OLIVEWOOD II IN (2) 67 340,543 3,839 780 7,696 (30,217) (1,591) 321,050
1807 BRUNSWICK MONONGALIA WV (2) 101 492,822 2,647 4,695 9,393 (56,580) 1,423 454,400
1813 SUFFOLK GROVE GROVE CITY OH (2) 71 383,887 4,994 2,883 6,465 (24,440) (4,981) 368,808
1815 MONTGOMERY CT II OH (2) 57 302,248 7,214 981 6,679 (27,058) (3,896) 286,168
1818 REDWOOD HOLLOW SMYRNA TN 72 365,600 1,700 1,926 4,442 (9,988) (3,115) 360,565
1829 CLEARVIEW GREENWOOD IN (2) 71 376,452 7,646 4,549 9,872 (39,675) (5,761) 353,083
1832 ANSLEY OAKS O'FALLON IL (2) 69 338,011 1,669 1,352 8,379 (32,479) 348 317,280
1844 OLIVEWOOD MI (2) 151 923,956 14,129 3,755 11,308 (32,731) (3,569) 916,848
1847 RED DEER FAIRBORN OH (2) 68 356,006 2,838 3,296 8,707 (17,005) (420) 353,422
1851 ASHGROVE II MI (2) 89 562,378 4,365 1,098 9,569 (36,893) (4,574) 535,943
1866 HEATHMOORE WAYNE II MI (2) 51 341,093 3,446 1,300 2,432 (19,545) (641) 328,085
1875 DOVER PLACE EASTLAKE IV OH (2) 72 424,324 6,308 2,461 6,839 (30,595) (3,179) 406,158
1905 CAMBRIDGE COMMONS II IN (2) 75 362,710 3,036 2,470 9,202 (40,309) (7,911) 329,198
1907 DOGWOOD GLEN MARION II IN (2) 77 395,141 2,789 1,971 9,364 (36,312) (958) 371,995
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
----------------------------------------------------------------------------------------------
Laundry
Vending
Rent Interest Security & Other Net
Prop # Name State Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
- ------------------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS (1)
----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1916 CLEARVIEW GREENWOOD II IN (2) 80 431,798 13,376 4,487 10,372 (31,957) (5,533) 422,543
1928 WOODLANDS III OH (2) 93 473,837 2,072 2,220 9,969 (59,925) (2,490) 425,683
1944 TIMBERCREEK OH (2) 77 371,208 1,140 2,614 6,511 (27,170) (1,995) 352,308
2100 SANFORD CT INVESTORS FL (2) 106 534,433 4,086 7,689 3,115 (6,930) (10,676) 531,717
2106 OLD ARCHER CT FL 72 362,310 3,924 3,010 9,600 (38,097) 297 341,044
2107 PALATKA OAKS FL (2) 34 142,897 1,918 2,306 2,225 (16,475) (4,568) 128,303
2112 TURKSCAP FL (2) 49 237,785 2,806 6,784 9,887 (28,729) (7,464) 221,069
2114 CEDARWOOD FL (2) 55 232,616 4,549 703 7,795 (18,394) 795 228,064
2115 UNIVERSITY SQ FL 81 376,632 3,602 2,720 12,494 (24,055) (2,002) 369,391
2129 NORTHWOOD FL 42 186,248 855 1,364 3,426 (22,545) (4,858) 164,490
2139 MEADOWOOD II FL 54 288,294 1,970 190 2,137 (12,030) 503 281,064
2143 CEDARWOOD II FL (2) 39 174,842 1,032 1,243 5,109 (14,728) (752) 166,746
2153 NOVAWOOD FL (2) 57 286,360 1,169 6,903 16,949 (24,594) (13,033) 273,754
2164 PALATKA OAKS II FL (2) 23 120,167 1,113 532 (559) (6,699) (2,095) 112,459
2165 NOVAWOOD II FL (2) 61 301,256 2,623 6,693 14,089 (26,246) (6,147) 292,268
2166 WINGWOOD FL 86 444,870 4,437 3,139 15,318 (16,604) (7,497) 443,663
2173 COUNTRYSIDE FL (2) 59 297,705 2,850 1,265 6,661 (16,592) (813) 291,076
2174 COUNTRYSIDE II FL (2) 96 494,804 3,923 2,721 14,274 (32,099) (6,210) 477,413
2189 HIDDEN PINES FL (2) 56 323,749 1,967 1,715 4,212 (12,180) (750) 318,713
2190 MOSSWOOD FL (2) 57 301,970 2,295 3,622 10,820 (24,424) (7,913) 286,370
2191 MOSSWOOD II FL (2) 89 471,752 6,053 2,549 8,472 (26,498) (9,109) 453,219
2196 BRANCHWOOD FL (2) 117 604,756 2,124 3,128 11,069 (62,145) (2,605) 556,327
2199 CONCORD SQ II FL 73 360,546 5,429 2,705 6,880 (40,701) (2,975) 331,884
2205 BRANDYWYNE EAST FL (2) 38 176,999 3,016 2,118 3,149 (478) (975) 183,829
2212 AMBERWOOD FL (2) 50 232,783 1,648 1,698 9,092 (9,148) (399) 235,674
2215 COUNTRYSIDE III FL 34 166,460 774 625 1,879 (8,835) (1,121) 159,782
2218 INDIAN RIDGE FL 57 297,361 3,782 2,813 7,811 (7,959) (152) 303,656
2222 SHADOWOOD FL (2) 69 352,786 7,223 3,375 8,877 (22,919) (5,816) 343,526
2224 ROSEWOOD FL 66 301,197 3,759 1,452 6,354 (37,277) (3,586) 271,899
2226 SPRINGTREE FL 72 426,923 10,636 4,025 11,233 (13,680) (7,094) 432,043
2230 RIVERWOOD FL 68 330,290 2,606 4,030 4,070 (23,189) (2,393) 315,414
2231 APPLEWOOD FL (2) 69 328,095 1,508 6,709 10,437 (4,954) (15,590) 326,205
2234 WINDRUSH FL 67 337,025 914 2,053 10,297 (30,572) (6,794) 312,923
2235 HERONWOOD FL 59 318,380 1,265 1,660 8,699 (22,740) (5,683) 301,581
2237 SANDPIPER II FL (2) 66 329,234 2,011 3,256 10,960 (38,613) (8,063) 298,785
2240 BAYSIDE FL (2) 59 249,560 3,175 1,365 5,365 (28,091) (1,681) 229,693
2242 DEERWOOD FL (2) 50 248,315 2,796 1,733 1,297 (15,410) (1,212) 237,519
2244 CANDLELIGHT FL (2) 51 219,958 3,442 2,017 5,699 (18,861) 1,031 213,286
2246 GARDEN TERRACE II FL (2) 65 297,101 4,797 3,593 9,366 (64,001) (15,407) 235,449
2247 INDIAN RIDGE II FL 39 207,996 1,389 1,001 2,188 (3,131) 686 210,129
2249 SHADOWOOD II FL (2) 70 356,232 3,302 3,164 9,568 (35,290) (2,839) 334,137
2251 STRAWBERRY PLACE FL (2) 55 248,131 2,976 3,440 6,729 (14,672) (272) 246,332
2254 TURKSCAP III FL (2) 50 252,494 5,729 5,764 8,243 (16,116) (9,212) 246,902
2265 PINE LAKE FL (2) 41 197,388 2,380 1,838 4,108 (27,872) (1,624) 176,218
2284 CAPITAL RIDGE FL 70 376,713 2,505 2,369 6,127 (16,939) (1,476) 369,299
2285 WOODLAND FL (2) 92 493,947 2,208 9,282 14,944 (28,701) (18,283) 473,397
2288 SHADOW RIDGE FL (2) 62 323,535 3,007 3,765 10,245 (22,640) (748) 317,164
2295 HICKORY PLACE FL (2) 70 369,192 7,415 1,893 5,677 (24,822) 1,702 361,057
2300 PINE TERRACE FL (2) 80 378,051 1,044 2,383 4,051 (52,474) (353) 332,702
2301 PALM PLACE FL (2) 80 465,440 6,088 3,373 10,905 (13,953) 645 472,498
2309 THE LANDINGS FL (2) 60 277,671 5,534 1,999 6,799 (12,946) (862) 278,195
2311 ASTORWOOD FL 75 499,005 6,537 5,154 13,229 (10,613) (2,353) 510,959
2312 PINELLAS PINES FL (2) 68 365,299 2,108 2,436 8,879 (27,794) 21 350,949
2313 SPRING GATE FL (2) 66 319,765 3,685 2,293 3,476 (16,522) 571 313,268
2314 GARDEN TERRACE III FL 91 433,078 8,813 4,911 11,241 (109,333) (17,456) 331,254
2340 SHADOW BAY FL (2) 53 286,084 536 3,492 6,958 (20,683) (3,761) 272,626
2341 TERRACE TRACE FL (2) 87 411,402 3,705 2,553 6,404 (14,985) 526 409,605
2343 KINGS CROSSING FL 69 362,093 3,515 2,408 6,949 (19,537) (4,380) 351,048
2344 ELMWOOD FL (2) 52 318,380 2,897 3,979 12,808 (17,724) (3,843) 316,497
</TABLE>
<PAGE> 12
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
----------------------------------------------------------------------------------------------
Laundry
Vending
Rent Interest Security & Other Net
Prop # Name State Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
- ------------------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS (1)
----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2355 NOVA GLEN FL (2) 61 317,355 1,292 7,254 14,743 (37,289) (13,323) 290,032
2363 MORNINGSIDE II FL (2) 182 771,104 4,258 3,500 20,673 (251,520) (25,359) 522,656
2365 APPLEWOOD II FL (2) 93 400,457 2,524 1,066 9,937 (91,237) (8,022) 314,725
2376 MOULTRIE FL 79 452,455 2,487 1,423 5,300 (1,992) (102) 459,571
2379 SUGARTREE FL (2) 60 311,529 3,265 2,905 6,569 (31,250) 701 293,719
2387 SOUTHGATE FL 62 436,709 2,543 4,105 15,436 (33,461) (9,432) 415,900
2399 SUTTON PLACE FL (2) 55 258,187 828 5,485 5,082 (9,729) (5,278) 254,575
2405 DRIFTWOOD FL (2) 63 341,455 5,696 1,374 11,240 (30,977) (3,361) 325,427
2407 PINE MEADOWS FL (2) 60 337,836 2,219 1,894 9,268 (29,011) (4,243) 317,963
2411 ELMWOOD II FL (2) 50 307,263 4,358 2,440 14,678 (12,457) (3,969) 312,313
2412 PARKWAY NORTH FL 56 311,857 1,031 2,059 7,016 (23,062) (1,724) 297,177
2416 PINE TERRACE II FL (2) 68 321,849 1,002 2,252 4,631 (38,269) (453) 291,012
2422 HILLVIEW TERRACE FL 60 305,701 5,906 2,764 6,394 (3,419) 1,457 318,803
2427 HILLCREST VILLA FL (2) 65 303,642 5,462 3,359 8,398 (13,604) 895 308,152
2429 CYPRESS FL (2) 70 348,743 2,822 3,069 7,352 (14,117) (222) 347,647
2431 OLYMPIAN VILLAGE FL 87 558,247 2,174 9,624 29,036 (71,077) (20,751) 507,253
2432 SILVER FOREST FL (2) 51 246,740 2,770 1,761 6,685 (23,807) (994) 233,155
2438 BERRY PINES FL (2) 64 305,832 2,720 4,066 7,028 (14,312) 439 305,773
2439 OAK RIDGE FL (2) 63 311,376 4,472 1,590 8,354 (423) 565 325,934
2441 OAK SHADE FL (2) 82 429,057 2,589 2,645 10,409 (15,040) (4,566) 425,094
2442 HOLLY SANDS FL (2) 72 389,749 3,495 6,137 7,471 (7,898) (3,302) 395,652
2443 BROADVIEW OAKS FL 90 424,258 3,776 3,485 5,806 (35,543) (3,783) 397,999
2444 THYMEWOOD FL 89 651,457 6,560 2,421 24,984 (71,085) (29,013) 585,324
2446 SHADOW BAY II FL (2) 59 319,460 3,313 7,744 6,104 (25,406) (4,582) 306,633
2447 CANDLELIGHT II FL (2) 60 255,568 3,459 2,900 3,027 (26,708) (192) 238,054
2449 SUGARTREE II FL 60 310,459 1,836 2,420 5,889 (28,397) (1,273) 290,934
2451 WINTER WOODS FL (2) 57 293,420 1,883 3,995 8,553 (12,017) (4,353) 291,481
2452 WOODLAND II FL (2) 77 417,115 1,690 9,753 16,246 (25,584) (18,616) 400,604
2454 BEL AIRE FL (2) 69 433,720 2,530 2,050 18,673 (22,897) (9,971) 424,105
2459 CLEARLAKE PINES II FL (2) 51 269,149 2,122 804 6,511 (13,398) (152) 265,036
2460 MANCHESTER FL 78 390,655 3,598 3,648 4,873 (17,162) (928) 384,684
2461 RANCHSIDE FL (2) 76 325,988 3,095 2,264 3,973 (13,830) (635) 320,855
2464 ESSEX SQ FL 88 428,016 4,276 5,744 10,037 (3,604) (1,519) 442,950
2465 WESTCREEK FL (2) 86 457,783 1,614 1,417 10,865 (54,025) (4,885) 412,769
2466 SKY PINES FL (2) 88 456,803 3,235 7,527 14,590 (29,508) (19,584) 433,063
2470 RIVERS END FL (2) 66 352,081 2,822 2,682 6,894 (24,574) (2,049) 337,856
2471 BRIDGE POINT FL 71 361,336 3,042 2,952 11,043 (14,161) (2,016) 362,196
2478 NOVA GLEN II FL (2) 81 396,490 1,890 8,118 15,177 (48,934) (15,152) 357,589
2483 OAKWOOD MANOR FL (2) 63 358,371 1,066 3,401 6,873 (30,531) (1,212) 337,968
2484 HOLLY RIDGE FL (2) 98 617,957 1,807 6,106 17,504 (51,332) (8,880) 583,162
2488 HIGH POINTS FL (2) 95 398,495 5,317 3,718 7,433 (6,027) (562) 408,374
2499 WINTER WOODS II FL 44 227,907 829 3,188 4,522 (9,702) (5,493) 221,251
2502 PALM SIDE FL 87 395,747 1,373 1,264 10,354 (19,174) (2,770) 386,794
2574 PALM BAY/WINDWOOD II FL (2) 64 291,296 1,923 1,175 11,029 (38,013) (5,675) 261,735
3101 MEADOWOOD NORCROSS GA 61 399,391 2,090 4,256 6,662 (7,695) (1,179) 403,525
3102 CEDARGATE LAWRENCEVILLE GA 55 358,562 3,976 1,581 6,520 (24,776) 2,692 348,555
3104 WILLOW RUN DEKALB GA 73 470,034 5,343 2,478 14,972 (60,686) (24,825) 407,316
3108 FOREST VILLAGE BIBB GA (2) 83 455,575 4,055 2,045 6,671 (26,962) 798 442,182
3109 RIDGEWOOD DEKALB GA 63 393,035 2,432 3,338 8,369 (40,992) (6,869) 359,313
3111 IRIS GLEN ROCKDALE GA (2) 79 495,713 7,503 4,398 10,607 (55,684) (3,713) 458,824
3112 MEADOWLAND CLARKE GA (2) 60 334,282 1,454 3,049 6,320 (56,528) 1,591 290,168
3114 WILLOWOOD MILLEDGEVILLE GA (2) 61 316,910 3,241 2,008 2,813 (11,211) 46 313,807
3115 MEADOWOOD NORCROSS II GA (2) 51 329,630 4,299 2,973 4,004 (13,813) (1,328) 325,765
3116 VALLEYFIELD DEKALB GA (2) 66 420,355 3,751 2,389 14,823 (31,092) (10,947) 399,279
3117 NORWOOD GWINNETT GA 74 485,991 5,015 1,828 5,725 (7,652) 33 490,940
3118 SHADOW TRACE DEKALB GA (2) 81 517,388 3,818 1,619 11,806 (61,071) (14,317) 459,243
3120 OAKLEY WOODS GA (2) 60 356,529 1,527 1,933 12,239 (15,960) (8,918) 347,350
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
----------------------------------------------------------------------------------------------
Laundry
Vending
Rent Interest Security & Other Net
Prop # Name State Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
- ------------------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS (1)
----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3121 ELMWOODS MARIETTA GA (2) 48 313,921 2,030 1,075 2,482 (4,738) (544) 314,226
3122 WOOD TRAIL NEWMAN GA (2) 61 358,507 4,204 2,434 4,940 3,403 2,692 376,180
3123 REDAN VILLAGE DEKALB GA (2) 78 482,268 2,720 3,222 10,266 (53,692) (13,255) 431,529
3124 BARRINGTON DEKALB GA (2) 47 297,968 3,768 2,314 7,373 (30,204) (10,790) 270,429
3125 STRATFORD LANE GA (2) 67 336,320 2,747 3,243 9,657 (8,517) 741 344,191
3127 WOODCLIFF LILBURN GA (2) 71 453,421 3,208 2,795 6,507 (20,650) (3,441) 441,840
3128 WOODCREST WARNER ROBINS GA (2) 66 335,893 2,491 1,616 5,059 (24,713) (2,782) 317,564
3130 RAMBLEWOOD RICHMOND GA 84 417,196 5,332 2,078 4,096 (52,060) (5,633) 371,009
3131 COUNTRYSIDE MANOR GA (2) 82 494,845 3,200 9,586 9,797 (18,614) (10,246) 488,568
3135 WATERBURY CLARKE GA (2) 53 302,967 5,443 1,730 4,508 (19,239) (1,363) 294,046
3137 GENTIAN OAKS GA (2) 62 308,097 2,047 2,005 6,242 (5,136) 1,779 315,034
3138 WILLOW CREEK GRIFFIN GA (2) 53 288,846 2,500 1,994 (838) (9,534) 1,021 283,989
3139 TIMBERWOODS PERRY GA (2) 60 291,045 2,253 3,314 3,928 (9,468) 469 291,541
3140 CARRIAGE HILLS DUBLIN GA (2) 60 279,207 2,131 1,021 1,755 (14,534) (1,077) 268,503
3141 HILLANDALE MANOR DEKALB GA (2) 48 311,612 1,977 1,043 10,368 (11,022) (7,114) 306,864
3142 WHISPERWOOD CORDELE GA (2) 50 225,602 3,422 770 2,948 (8,577) 231 224,396
3143 OAKWOOD VILLAGE RICHMOND GA (2) 70 345,498 2,914 4,744 5,436 (10,488) (3,213) 344,891
3145 PINE KNOLL CLAYTON GA (2) 46 267,652 1,930 740 2,811 (13,762) 1,082 260,453
3149 HARBINWOOD GWINNETT GA (2) 73 475,560 2,761 5,645 8,259 (7,430) 577 485,372
3150 PARKWOOD VILLAGE GA 69 410,419 8,228 2,951 8,744 (28,470) (888) 400,984
3151 AMBERWOOD BARTOW GA 56 311,313 4,546 4,645 7,484 (26,116) (2,153) 299,719
3152 WOOD VALLEY CALHOUN AL (2) 69 328,076 4,215 1,032 4,499 (16,578) 1,068 322,312
3153 NORTHRIDGE CARROLLTON GA (2) 77 401,186 5,488 3,010 8,757 (24,497) 241 394,185
3154 HILLSIDE MANOR AMERICUS GA (2) 60 260,064 2,431 3,347 357 (27,911) (3,611) 234,677
3156 VALLEYFIELD DEKALB II GA (2) 66 421,010 5,250 3,137 10,849 (33,737) (11,439) 395,070
3158 WOODCLIFF LILBURN II GA (2) 72 426,658 4,480 3,438 4,738 (18,259) (4,902) 416,153
3159 FOREST RIDGE RICHMOND GA (2) 74 332,288 470 3,083 (178) (59,996) (5,200) 270,467
3160 SHANNON WOODS II GA 73 407,022 2,961 6,087 13,152 (75,903) (28,072) 325,247
3161 HOLLY PARK GA (2) 66 305,885 2,999 1,988 6,855 (23,773) 1,564 295,518
3162 REDAN VILLAGE DEKALB II GA (2) 76 456,073 3,375 4,545 14,710 (66,508) (18,972) 393,223
3163 RIDGEWOOD DEKALB II GA (2) 52 314,256 2,420 3,527 8,865 (38,955) (4,562) 285,551
3168 KNOX LANDING KNOXVILLE TN (2) 85 420,720 2,579 3,272 6,984 (13,494) (4,383) 415,678
3176 MORGAN TRACE GA (2) 80 441,128 2,954 2,482 7,604 (46,589) (6,627) 400,952
3184 AMBERWOOD BARTOW II GA 61 334,462 7,842 5,280 3,491 (33,977) (1,171) 315,927
3197 PARKWOOD VILLAGE II GA 66 372,531 5,527 4,374 6,231 (25,311) (5,416) 357,936
3200 SKYRIDGE GA 120 713,433 5,489 6,436 4,460 (21,201) 361 708,978
3266 MARSH LANDING GA (2) 57 285,717 2,123 1,819 4,117 (32,795) (1,520) 259,461
3269 WOODSIDE GA (2) 52 247,816 1,553 3,573 3,827 (9,522) (461) 246,786
3270 GREENTREE GA 43 196,322 1,341 1,378 5,074 (11,740) (876) 191,499
3271 STILLWATER GA (2) 53 293,875 1,228 2,506 5,567 (7,346) 771 296,601
3353 RAMBLEWOOD II GA (2) 28 133,711 914 2,238 1,545 (8,657) (2) 129,749
3358 LINK TERRACE GA (2) 54 287,297 3,089 2,131 8,265 (19,265) (302) 281,215
3366 GREENTREE II GA 32 144,737 1,059 2,117 3,259 (12,740) 349 138,781
3378 SUNNYSIDE GA (2) 72 326,739 1,351 4,955 8,039 (19,759) (417) 320,908
3409 QUAIL CALL GA (2) 55 250,812 874 890 6,088 (12,874) (3,559) 242,231
3428 WESTWAY GA (2) 70 355,886 4,173 3,397 6,111 (37,506) (1,338) 330,723
3430 CAMDEN WAY GA (2) 61 272,226 801 1,643 8,828 (50,667) (1,454) 231,377
3450 CAMDEN WAY II GA (2) 57 256,797 4,513 2,111 7,416 (37,195) (2,656) 230,986
4101 FORSYTHIA CT HARFORD MD (2) 76 449,991 12,136 5,856 12,971 (35,588) (9,005) 436,361
4708 ANNHURST HARFORD MD 67 432,523 2,963 5,931 13,856 (22,444) (1,504) 431,325
287
-------------------------------------------------------------------------------------
391 24,744 128,898,728 1,269,724 1,064,730 2,478,476 (8,921,257) (1,161,387) 123,629,014
-------------------------------------------------------------------------------------
(1) Does not include 14 properties that were purchased in the fourth quarter of 1997 and two properties pending disposal as
of 12/31/97
(2) 287 properties purchased in first quarter of 1998.
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
------------------------------------------------------------------------------------------------------
Prop Real Interest Major
Oper Estate Net First Subord. Payable Depre Maint. Non
& Taxes & Operating Mortgage Debt To & & Operating Net
# Name Maint Insur. Income Interest Interest Lexford Amort Replace Expenses Income
- ------------------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS (1)
-------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1109 DOGWOOD TERRACE 213,017 27,644 252,964 185,540 0 48,575 90,233 183,001 7,365 (261,750)
1112 LONDON LAMPLIGHT 102,227 18,740 91,513 13,813 0 4,542 20,285 12,413 2,824 37,636
1123 SPRINGFIELD WOODGATE 82,704 11,050 48,483 25,363 5,282 3 18,195 10,667 (2,107) (8,920)
1262 THE BIRCHES OF LIMA 87,205 15,645 122,468 85,276 0 3,639 18,973 6,038 10,888 (2,346)
1297 PLUMWOOD 155,948 40,685 290,122 155,977 0 12,834 31,128 19,624 6,706 63,853
1310 MELDON PLACE 167,171 59,251 346,078 160,888 0 62,830 69,795 11,677 6,296 34,592
1320 WEST OF EASTLAND 181,439 51,186 275,455 184,691 0 74,577 127,736 20,142 72,856 (204,547)
1322 PARKVILLE 165,433 43,391 245,869 155,062 0 1,650 38,458 8,929 11,437 30,333
1327 CHARING CROSS 95,891 22,138 168,228 73,564 0 25,498 35,559 4,681 4,081 24,845
1329 INDEPENDENCE VILLAGE 215,545 51,690 238,235 196,194 0 7,445 63,513 32,926 5,647 (67,490)
1330 POPLAR CT 97,836 18,590 151,419 70,173 3,357 668 35,580 13,949 (4,992) 32,684
1341 GREENLEAF 70,496 21,693 75,725 50,827 6,474 7,380 22,782 8,824 2,870 (23,432)
1344 LAUREL CT FREMONT 106,412 18,712 156,718 122,767 0 19,191 36,833 3,745 4,952 (30,770)
1379 AMHURST 130,158 30,034 155,853 82,715 0 6,593 34,921 4,501 3,870 23,253
1404 KETWOOD 155,532 48,098 249,197 147,060 0 5,955 69,004 5,094 33,409 (11,325)
1437 HICKORY MILL 102,582 29,032 169,725 90,563 0 0 41,639 11,259 13,375 12,889
1455 MONTROSE SQ II 111,602 15,039 131,631 67,166 0 60,167 43,470 4,869 3,762 (47,803)
1456 APPLE RIDGE II 67,849 18,205 129,293 81,978 0 25,048 34,755 8,338 5,000 (25,826)
1460 WESTWOOD NEWARK 35,565 4,159 12,132 8,087 0 5,763 7,337 1,249 1,517 (11,821)
1461 APPLE RUN II 90,980 20,274 112,547 44,012 5,777 23,411 33,914 6,429 4,329 (5,325)
1462 PLUMWOOD CHESTERFIELD 71,516 12,746 92,774 37,895 259 9,886 24,188 5,809 2,544 12,193
1464 GREENGLEN WHEELERSBURG 87,201 21,910 152,002 89,505 0 58,005 50,120 14,071 6,155 (65,854)
1465 CEDARWOOD BELPRE 66,189 10,051 89,888 54,652 0 3,462 33,149 6,882 5,908 (14,165)
1466 AMHURST DAYTON II 124,662 29,482 165,645 85,437 0 4,147 39,668 3,993 (825) 33,225
1469 CHELSEA CT SANDUSKY 96,728 20,760 159,238 62,861 0 16,275 40,114 6,212 2,316 31,460
1470 MILLSTON ABERDEEN 77,875 13,012 85,178 38,034 0 38,362 39,835 3,573 2,884 (37,510)
1473 MILLBURN DAYTON II 93,997 22,433 137,218 82,030 0 43,978 35,767 5,706 (3,314) (26,949)
1483 WOODBINE PORTSMOUTH 63,757 12,210 89,533 57,375 0 11,350 27,866 8,084 6,406 (21,548)
1485 HAMPSHIRE ELYRIA II 110,131 22,060 124,986 72,188 0 28,978 38,005 4,474 3,804 (22,463)
1489 PLUMWOOD FT. WAYNE 92,698 21,984 139,730 54,711 0 28,780 34,025 6,256 3,431 12,527
1491 CAMELLIA CT 73,610 12,712 85,230 48,539 0 27,052 26,311 7,407 2,748 (26,827)
1499 CONCORD SQ ONTARIO 80,469 13,099 95,570 55,652 0 2,589 26,116 5,505 2,530 3,178
1505 CAMELLIA CT DAYTON 105,005 26,117 133,014 98,730 0 2,081 43,470 7,331 (3,733) (14,865)
1510 BECKFORD PLACE 72,119 10,111 84,148 49,710 0 15,491 29,264 3,406 10,731 (24,454)
1511 APPLEGATE II 93,716 6,636 54,385 49,692 0 24,110 32,834 12,538 (4,246) (60,543)
1512 SPRINGWOOD NEW HAVEN 88,887 21,941 112,904 66,141 0 32,487 33,285 4,474 (19,684) (3,799)
1516 THE WILLOWS DEL II 61,557 23,017 109,527 62,497 0 40,379 28,826 3,723 2,021 (27,919)
1519 GREENGLEN ALLEN II 75,663 15,471 129,671 80,325 0 17,039 40,445 4,346 6,279 (18,763)
1523 LARKSPUR MORAINE 54,356 4,392 74,478 38,872 0 14,599 23,749 1,861 2,490 (7,093)
1524 MILLSTON ABERDEEN II 60,046 9,480 62,136 28,323 0 34,236 31,555 2,059 28,643 (62,680)
1526 CAMELLIA CT 80,991 27,265 206,192 96,211 0 6,195 42,525 6,988 5,185 49,088
1527 WOODBINE CUY FALLS 89,842 26,778 202,756 95,181 0 17,451 45,466 9,048 4,066 31,544
1528 APPLEGATE LORDSTOWN 83,738 13,399 92,709 47,276 0 19,765 20,790 3,322 2,845 (1,289)
1529 PARKVILLE ENGLEWOOD 83,756 21,825 129,706 53,777 0 7,132 24,874 3,550 (6,628) 47,001
1530 CEDARWOOD SABINA 59,370 10,238 52,213 35,091 0 4,825 20,821 3,719 14,601 (26,844)
1531 ANDOVER CT MT. VERNON 131,031 13,340 116,932 67,150 0 15,299 37,726 6,531 1,839 (11,613)
1533 HAMPSHIRE BLUFFTON 86,564 16,906 98,337 55,873 0 24,268 32,142 4,407 2,714 (21,067)
1534 CONCORD SQ 85,264 23,015 122,219 73,726 0 13,977 31,078 2,096 3,059 (1,717)
1535 GREENGLEN II 81,388 24,473 163,762 81,215 0 39,886 46,357 9,160 13,499 (26,355)
1539 FOXTON SEYMOUR 84,302 12,037 61,940 62,616 0 10,822 24,180 504 2,412 (38,594)
1540 DARTMOUTH PLACE KENT 91,128 31,346 168,959 94,025 0 1,900 39,453 10,786 3,546 19,249
1549 CAMELLIA CT DAYTON II 89,325 23,500 132,840 71,336 0 15,715 33,144 5,482 31,506 (24,343)
</TABLE>
<PAGE> 15
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
------------------------------------------------------------------------------------------------------
Prop Real Interest Major
Oper Estate Net First Subord. Payable Depre Maint. Non
& Taxes & Operating Mortgage Debt To & & Operating Net
# Name Maint Insur. Income Interest Interest Lexford Amort Replace Expenses Income
- ------------------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS (1)
-------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1550 APPLEGATE 90,346 31,574 182,315 88,179 0 8,118 47,277 3,913 3,960 30,868
1553 APPLE RIDGE III 42,451 11,123 81,178 47,563 0 2,621 20,215 5,754 2,128 2,897
1554 SPRINGWOOD II 87,134 19,132 83,851 49,725 1,603 12,957 27,606 4,298 6,154 (18,492)
1555 DOVER PLACE EASTLAKE 93,138 24,475 266,532 103,871 0 23,497 54,840 7,947 25,743 50,634
1556 PARKVILLE PARKERSBURG 84,804 13,582 118,094 78,134 0 10,530 31,085 5,674 2,854 (10,183)
1557 HARTWICK TIPTON 75,315 13,064 132,768 55,934 6,536 14,117 35,862 4,378 (6,215) 22,156
1558 BECKFORD PLACE 97,975 20,867 187,143 93,152 0 15,097 54,990 9,332 (8,707) 23,279
1559 LARKSPUR 95,892 30,648 194,134 94,460 0 10,140 50,373 12,991 24,007 2,163
1560 SPRINGWOOD 109,056 28,869 153,565 116,006 0 6,789 31,187 1,893 7,179 (9,489)
1561 PARKVILLE GAS CITY 100,828 20,319 106,714 67,151 0 38,111 36,583 6,506 3,301 (44,938)
1562 CAMELLIA CT CARROLLTON 101,417 12,263 128,428 57,204 0 30,609 34,379 3,298 3,571 (633)
1563 FOXTON DAYTON II 140,906 38,469 188,925 126,142 0 37,957 59,961 11,494 4,688 (51,317)
1566 APPLE RUN HILLSDALE 77,670 14,378 100,307 44,935 0 18,854 24,915 3,924 3,066 4,613
1567 PINE GROVE ROSEVILLE 77,767 31,807 174,329 99,223 0 13,612 36,127 4,184 643 20,540
1568 ASHGROVE FRANKLIN 108,825 23,492 171,615 111,204 0 8,363 45,882 4,557 (3,495) 5,104
1569 MEADOWOOD JACKSON 83,919 25,073 148,797 83,207 0 15,784 33,127 1,703 8,260 6,716
1572 CONCORD SQ KOKOMO 72,831 22,642 153,879 71,559 0 14,291 38,846 3,901 3,633 21,649
1573 SANDALWOOD ALEXANDRIA 99,377 18,539 74,056 52,592 0 27,196 31,420 3,963 (3,966) (37,149)
1574 AMHURST 93,072 29,209 169,704 73,740 0 21,333 35,836 8,945 3,905 25,945
1575 HAMPSHIRE WILLIAMSTOWN 57,324 12,241 52,572 32,643 0 4,858 17,686 0 121,763 (124,378)
1576 MEADOWOOD MANSFIELD 94,262 15,507 120,435 83,038 0 17,118 34,901 3,015 3,025 (20,662)
1577 HICKORY MILL HURRICANE 87,723 15,969 129,744 84,150 0 16,543 37,116 6,857 (22,998) 8,076
1579 MEADOWOOD FRANKLIN 87,797 18,777 181,909 94,453 0 26,236 36,513 4,233 4,022 16,452
1581 CEDARWOOD GOSHEN 67,467 18,003 122,724 51,738 0 0 28,336 3,459 2,834 36,357
1582 CONCORD SQ ONTARIO II 65,010 11,382 59,882 56,269 0 5,122 18,951 5,362 3,761 (29,583)
1583 MEADOWOOD CRAWFORDS. 119,182 30,360 151,118 100,078 0 13,800 45,727 3,769 3,720 (15,976)
1585 BECKFORD PLACE 90,240 25,896 183,009 106,372 0 5,882 39,481 3,548 (6,502) 34,228
1588 PLUMWOOD III 50,918 13,934 114,632 40,967 0 20,585 25,403 5,969 17,381 4,327
1589 WOODLANDS 130,559 47,963 248,185 166,799 0 1,949 60,025 9,565 18,304 (8,457)
1590 WOODLANDS FRANKLIN 106,063 18,430 88,345 59,263 13,242 40,106 35,409 4,931 6,369 (70,975)
1591 MEADOWOOD FLATWOODS 82,073 15,869 117,256 77,685 0 21,572 36,174 8,689 (2,914) (23,950)
1592 GREENGLEN DAYTON 119,111 37,461 216,156 105,035 0 27,888 49,674 8,756 578 24,225
1593 ASHGROVE 110,945 24,530 180,398 80,831 0 24,939 47,854 3,241 6,321 17,212
1595 MEADOWOOD NICHOLAS. 107,822 17,805 215,767 126,225 0 13,363 52,086 6,719 (5,294) 22,668
1596 STONEHENGE RICHMOND 101,966 30,781 186,849 101,133 0 13,503 46,678 4,305 (47,752) 68,982
1597 WILLOWOOD 72,352 22,172 176,125 88,496 0 86,096 37,407 7,081 (4,231) (38,724)
1598 CEDARGATE 88,239 15,232 178,411 80,890 0 29,218 57,132 4,575 (5,422) 12,018
1599 WILLOW RUN WILLARD 106,800 15,886 118,133 78,453 0 33,038 45,475 3,075 (1,990) (39,918)
1600 HEATHMOORE JEFFERSON 119,401 17,225 169,161 84,789 0 38,964 46,597 2,858 4,484 (8,531)
1601 STONEHENGE GLASGOW 90,361 14,417 116,319 65,628 0 38,522 43,079 2,503 4,723 (38,136)
1602 HEATHMOORE 92,595 24,634 143,770 110,735 0 15,057 38,762 2,723 6,692 (30,199)
1603 APPLE RUN TRUMBULL 109,110 17,150 94,980 61,603 0 26,599 38,418 2,684 47,898 (82,222)
1604 FOXTON MONROE 99,893 31,212 154,549 81,880 0 3,361 33,131 6,376 3,987 25,814
1605 ASHGROVE CALHOUN 103,969 29,263 122,297 73,984 0 17,079 32,995 6,279 15,448 (23,488)
1606 STONEHENGE OTTAWA 56,327 7,136 97,696 50,951 0 15,238 29,448 3,696 (2,324) 687
1613 WOODLANDS ZELIENOPLE 100,822 26,512 170,519 93,713 0 18,480 37,375 12,217 1,900 6,834
1615 RIDGEWOOD WESTLAND 111,871 40,468 189,412 112,958 0 7,830 36,538 8,494 (165,434) 189,026
1616 HEATHMOORE MACOMB 124,026 39,715 230,350 155,183 0 762 41,373 2,463 38,285 (7,716)
1617 DOVER PLACE II 98,151 23,746 245,479 146,250 0 8,856 51,589 7,268 6,098 25,418
1618 DOVER PLACE III 47,318 11,409 120,354 69,300 0 4,626 23,811 3,296 4,396 14,925
1619 CEDARGATE MICH CITY 106,817 32,488 115,307 71,888 0 37,929 41,058 5,632 (20,931) (20,269)
1622 CEDARGATE BLOOMINGTON 126,328 41,166 204,456 105,677 0 23,840 58,644 3,814 4,601 7,880
1623 CEDARGATE 88,079 13,373 96,063 56,324 0 25,248 24,608 9,851 9,469 (29,437)
1624 STONEHENGE JEFFERSON 106,511 17,826 186,530 79,385 0 65,043 42,251 4,484 4,262 (8,895)
</TABLE>
<PAGE> 16
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
------------------------------------------------------------------------------------------------------
Prop Real Interest Major
Oper Estate Net First Subord. Payable Depre Maint. Non
& Taxes & Operating Mortgage Debt To & & Operating Net
# Name Maint Insur. Income Interest Interest Lexford Amort Replace Expenses Income
- ------------------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS (1)
-------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1626 SLATE RUN 156,734 38,800 313,329 182,775 0 20,916 70,319 4,757 18,225 16,337
1630 SANDALWOOD 71,532 26,250 160,966 96,451 0 9,680 33,503 5,607 4,685 11,040
1635 RIDGEWOOD 81,317 27,014 206,344 95,392 0 31,670 40,052 10,658 12,392 16,180
1637 APPLEGATE DELAWARE 90,842 33,458 151,575 83,322 0 19,593 37,265 5,943 4,442 1,010
1638 MEADOWOOD LOGANSPORT 84,235 17,454 99,618 61,319 0 16,008 26,947 3,304 (2,996) (4,964)
1639 SLATE RUN LEBANON 117,356 29,557 163,257 108,583 0 14,470 50,629 1,502 10,573 (22,500)
1640 WESTWOOD ROCHESTER 80,047 18,909 76,653 67,176 0 26,763 30,330 3,662 (4,433) (46,845)
1641 WILLOWOOD WOOSTER 95,722 18,399 126,414 64,195 0 24,900 33,991 4,600 22,456 (23,728)
1642 STONEHENGE STARK 107,298 19,808 152,809 57,051 0 31,200 44,234 5,255 4,087 10,982
1644 RIDGEWOOD LEXINGTON 92,068 14,327 229,163 96,345 0 65,004 52,071 4,227 4,474 7,042
1645 RIDGEWOOD BEDFORD 72,834 23,612 131,175 76,602 0 27,124 38,108 5,457 6,319 (22,435)
1646 CAMELLIA CT II 57,518 18,749 132,875 85,152 0 8,188 28,694 1,610 7,265 1,966
1647 CEDARGATE ENGLEWOOD 98,807 33,147 186,637 109,020 0 19,462 42,791 6,210 6,959 2,195
1648 SLATE RUN HOPKINSVILLE 131,680 12,177 94,133 83,036 0 49,722 49,563 13,158 3,684 (105,030)
1649 WILLOWOOD GROVE CITY 82,099 25,351 139,707 85,306 0 19,091 39,110 5,768 5,793 (15,361)
1650 MEADOWOOD 99,878 28,314 176,302 95,599 0 25,732 47,606 7,063 3,887 (3,585)
1651 STONEHENGE 107,069 24,224 192,575 108,000 0 34,741 48,034 742 (7,973) 9,031
1652 MEADOWOOD WARRICK 115,369 27,897 121,731 86,956 0 48,043 44,840 8,298 (33,261) (33,145)
1653 WILLOWOOD EAST 99,080 29,093 149,548 88,450 3,024 38,301 48,508 1,534 (1,557) (28,712)
1655 CEDARGATE SHELBY 101,549 18,649 163,614 105,142 0 21,797 47,878 12,763 28,845 (52,811)
1656 RIDGEWOOD RUSSELVILLE 87,017 10,027 99,492 67,250 0 48,665 34,253 3,627 55,413 (109,716)
1657 WILLOW RUN NEW ALBANY 108,444 27,596 216,356 101,864 0 34,981 43,572 13,396 34,175 (11,632)
1658 ASHGROVE JEFFERSON 112,135 12,611 189,612 96,036 0 37,300 50,547 5,339 4,500 (4,110)
1659 SLATE RUN JEFFERSON 115,115 16,848 195,431 81,699 0 45,693 46,992 20,844 4,448 (4,245)
1660 MEADOWOOD LEXINGTON 83,857 13,526 127,540 67,834 0 27,904 36,418 6,674 (1,666) (9,624)
1661 FORSYTHIA CT 119,724 34,936 165,197 89,023 0 25,447 37,501 12,757 4,772 (4,303)
1663 WATERBURY GREENWOOD 97,649 19,574 124,988 74,250 0 23,942 32,522 6,623 (3,965) (8,384)
1664 SLATE RUN BARDSTOWN 83,709 12,754 126,852 70,080 0 54,683 44,840 (28) 3,729 (46,452)
1666 WILLOWOOD FRANKFORT 103,947 10,950 144,097 89,533 0 54,332 44,251 6,999 (2,433) (48,585)
1667 BECKFORD PLACE 83,409 13,947 107,117 64,490 0 20,700 29,239 1,229 4,322 (12,863)
1669 WILLOWOOD OWENSBORO 97,528 14,416 104,411 62,886 0 52,008 39,518 4,587 2,922 (57,510)
1670 STONEHENGE MONTGOMERY 116,343 30,930 198,770 103,100 0 42,943 50,767 15,595 4,345 (17,980)
1671 LARKSPUR MORAINE II 33,808 1,225 32,665 19,115 0 7,350 8,013 984 1,493 (4,290)
1673 SLATE RUN BEDFORD 126,494 56,833 202,508 117,935 0 31,687 49,352 8,659 6,115 (11,240)
1674 ROSEWOOD JEFFERSON 135,571 26,520 260,080 147,082 0 46,395 65,825 5,921 5,554 (10,697)
1676 MILLBURN STOW 103,369 25,843 211,777 96,757 0 30,019 58,175 1,525 4,822 20,479
1677 WILLOW RUN MADISON. 122,729 27,899 160,063 99,502 0 49,095 48,047 16,796 (17,869) (35,508)
1678 CEDARWOOD GOSHEN II 64,025 19,253 142,045 84,160 0 17,217 33,998 8,820 3,058 (5,208)
1679 HEATHMOORE EVANSVILLE 112,436 37,940 187,519 98,269 0 37,575 54,011 9,177 36,475 (47,988)
1681 FOREST PARK MEADOWOOD 168,190 66,788 362,873 165,653 0 0 68,165 16,196 12,319 100,540
1682 STONEHENGE TECUMSEH 91,632 35,785 145,441 96,390 0 12,825 39,406 5,989 4,849 (14,018)
1683 BRANDON CT BLOOMINGTON 148,217 50,201 192,119 130,714 0 45,674 60,699 5,682 4,967 (55,617)
1686 ASHGROVE 189,959 67,858 421,689 247,014 9,220 75,479 101,355 6,993 7,591 (25,963)
1687 MONTGOMERY CT INGHAM 110,293 40,709 174,118 106,402 0 8,141 41,767 4,802 30,560 (17,554)
1691 PINE GROVE II 52,939 22,034 118,170 66,531 0 8,705 28,603 1,845 (21,663) 34,149
1692 MEADOWOOD MONROE 90,186 32,250 182,367 114,598 0 26,160 41,716 4,020 (22,108) 17,981
1695 ANNHURST 178,184 40,382 180,254 111,434 0 51,954 66,782 7,305 (375,491) 318,270
1696 ANNHURST ALLEGHENY 174,274 86,741 336,444 174,730 0 35,686 98,396 7,910 141,372 (121,650)
1698 WOODLANDS STREETSBORO 103,546 23,994 231,524 108,042 3,330 21,032 60,780 10,168 (9,695) 37,867
1699 ROANOKE OAKLAND 159,943 72,204 403,054 169,760 0 50,991 86,562 1,380 2,128 92,233
1700 DANIEL CT CLERMONT 197,717 49,264 322,981 228,934 0 56,705 83,467 10,817 (605,082) 548,140
1703 BARRINGTON BEDFORD 142,981 74,358 265,092 145,687 1,243 39,000 78,352 7,939 (9,647) 2,518
1704 MULBERRY HILLIARD 110,034 34,286 190,506 102,549 0 21,965 47,740 12,889 3,627 1,736
1705 WOODLANDS II 105,797 35,505 201,381 108,824 20,356 14,263 60,622 7,808 15,621 (26,113)
1707 LARKSPUR II 99,937 30,081 204,810 133,088 0 23,184 53,042 9,720 7,042 (21,266)
1714 NEWBERRY EATON 97,565 30,734 200,594 104,691 0 0 49,868 7,168 4,442 34,425
1717 HICKORY MILL II 81,565 15,379 123,868 73,440 0 8,749 35,531 6,453 42,703 (43,008)
1718 MEADOWOOD II 41,032 10,722 63,567 43,248 0 9,386 18,299 3,177 4,381 (14,924)
1719 VALLEYFIELD LEXINGTON 125,089 25,071 289,772 165,367 0 58,604 66,647 3,365 6,599 (10,810)
1720 RIDGEWOOD II 75,843 26,574 201,117 92,292 0 28,808 40,912 9,493 13,094 16,518
</TABLE>
<PAGE> 17
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
------------------------------------------------------------------------------------------------------
Prop Real Interest Major
Oper Estate Net First Subord. Payable Depre Maint. Non
& Taxes & Operating Mortgage Debt To & & Operating Net
# Name Maint Insur. Income Interest Interest Lexford Amort Replace Expenses Income
- ------------------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS (1)
-------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1721 OLIVEWOOD 101,722 29,132 195,239 85,160 0 39,734 53,810 2,988 20,890 (7,343)
1723 ROANOKE JEFFERSON 122,943 14,193 202,698 89,505 0 28,022 42,820 12,077 4,573 25,701
1724 MEADOWOOD CUY. FALLS 102,552 32,874 194,673 117,730 0 31,517 52,970 3,535 4,280 (15,359)
1725 RIDGEWOOD LEXINGTON II 70,238 13,843 189,334 97,819 0 38,740 45,910 5,474 4,051 (2,660)
1726 STONEHENGE JASPER 74,243 14,334 82,201 35,847 0 24,199 22,139 6,483 (20,094) 13,627
1727 CARLETON CT KANAWHA 114,761 27,147 220,736 111,453 0 35,488 54,712 2,734 6,194 10,155
1728 NEWBERRY GROVE CITY 113,842 27,302 138,020 78,449 0 49,091 43,259 3,141 9,937 (45,857)
1729 BECKFORD PLACE II 87,845 26,317 192,494 113,385 0 34,830 49,924 3,329 (960) (8,014)
1730 NORTHRUP CT ALLEGHENY 126,380 39,495 206,671 121,311 0 34,486 58,547 14,090 6,741 (28,504)
1731 FORSYTHIA CT JEFFERSON 183,226 18,044 276,612 161,696 6,531 51,099 76,433 7,547 5,663 (32,357)
1732 WINTHROP CT FRANKFURT 121,262 19,744 200,383 110,814 0 32,964 52,335 6,582 14,037 (16,349)
1733 PRINCETON CT EVANS. 120,241 30,664 147,681 85,590 2,926 48,533 43,965 5,864 3,840 (43,037)
1735 ROSEWOOD 160,355 45,184 215,411 117,596 0 43,793 76,020 7,617 1,610 (31,225)
1737 SLATE RUN JEFFERSON II 111,237 18,052 189,647 102,908 0 37,737 43,482 7,403 7,098 (8,981)
1741 WILLOWOOD TROTWOOD 99,996 35,986 134,850 77,850 0 40,684 45,301 2,117 5,168 (36,270)
1744 BRUNSWICK TRUMBULL 94,827 23,971 200,780 106,212 0 0 41,799 9,221 31,147 12,401
1745 WYCLIFFE CT 111,986 33,030 178,607 102,186 0 61,506 51,584 (5,668) 913 (31,914)
1747 SLATE RUN MIAMISBURG 89,899 24,204 146,884 77,937 0 37,358 41,329 6,034 7,668 (23,442)
1748 MONTGOMERY CT 117,665 28,227 182,400 115,379 0 53,753 50,980 6,144 7,553 (51,409)
1749 WATERBURY CLARKSVILLE 87,208 24,837 145,624 57,054 0 29,085 36,023 3,867 3,415 16,180
1751 WINTHROP CT 99,019 33,563 189,502 105,488 0 39,704 51,711 5,043 6,679 (19,123)
1752 PICKERINGTON MEADOWS 95,478 23,938 167,304 70,934 0 63,974 44,009 6,497 4,265 (22,375)
1756 WATERBURY CLERMONT 140,338 27,592 204,723 104,228 0 40,677 58,953 11,121 9,512 (19,768)
1757 WILLOWOOD GR CITY II 50,605 13,063 70,877 49,725 0 17,465 21,585 3,589 5,049 (26,536)
1758 CEDARGATE BLOOM. II 102,776 34,823 172,992 101,282 0 33,907 47,847 4,087 6,086 (20,217)
1759 ACADIA CT BLOOMINGTON 178,798 66,741 314,742 190,330 0 13,064 85,156 8,147 91,666 (73,621)
1760 WILLOWOOD EAST II 94,874 26,673 113,035 70,778 0 13,290 50,771 2,653 26,062 (50,519)
1761 SHERBROOK 87,529 30,993 163,708 88,010 0 32,370 39,732 5,453 6,163 (8,020)
1762 LONGWOOD LEXINGTON 105,899 15,546 175,819 98,870 0 51,369 43,309 3,314 (4,202) (16,841)
1763 NORTHRUP CT ALLE. II 98,882 29,587 174,069 78,831 0 16,818 44,685 9,604 95,393 (71,262)
1765 LAURELWOOD CT BEDFORD 65,521 22,969 136,474 77,820 0 22,754 38,271 7,436 4,663 (14,470)
1768 CARLETON CT ANN ARBOR 180,918 104,033 376,693 202,368 0 107,612 92,353 7,115 7,858 (40,613)
1770 ALLEGHENY CO. 172,338 66,265 299,436 178,680 0 12,632 69,685 8,584 82,265 (52,410)
1772 WENTWORTH ROSEVILLE 125,491 51,640 264,190 133,798 778 36,434 67,071 5,172 5,059 15,878
1773 WATERBURY WESTLAND 173,506 76,119 344,771 192,465 0 50,754 83,991 98 (70,932) 88,395
1777 HEATHMOORE II 125,535 37,185 189,030 120,331 0 32,371 60,164 3,582 (1,130) (26,288)
1779 AMBERIDGE ROSEVILLE 84,862 33,097 146,225 85,709 0 26,336 41,207 2,856 3,539 (13,422)
1783 WOODLANDS STREETS. II 98,733 23,468 221,592 143,100 0 23,016 56,110 3,075 5,533 (9,242)
1785 CARLETON CT ERIE 120,403 28,524 138,315 95,250 0 5,835 36,453 5,052 28,438 (32,713)
1787 ROSEWOOD COMMONS 156,044 38,846 241,394 161,073 0 34,775 66,904 13,692 7,219 (42,269)
1790 WILLOWOOD FRANKFORT II 84,604 14,481 118,206 77,867 0 38,725 42,887 7,959 3,732 (52,964)
1794 ANNHURST 86,319 22,943 155,366 103,785 0 73,181 48,237 (6,554) 983 (64,266)
1799 BEREA TABOR RIDGE 180,331 68,149 260,623 156,503 0 83 65,393 7,862 9,897 20,885
1801 WILLOWOOD WOOSTER II 97,506 18,817 99,871 83,409 0 10,335 35,895 5,828 (97,484) 61,888
1804 CAMBRIDGE COMMONS 148,813 32,277 210,675 81,248 16,786 6,987 65,215 4,605 106,965 (71,131)
1805 OLIVEWOOD II 105,612 27,094 188,344 113,825 0 3,021 57,380 3,812 6,676 3,630
1807 BRUNSWICK MONONGALIA 164,542 24,830 265,028 165,772 0 12,275 85,333 15,580 199,746 (213,678)
1813 SUFFOLK GROVE GR CITY 97,763 37,389 233,656 110,859 0 39,191 42,248 5,044 (47,938) 84,252
1815 MONTGOMERY CT II 102,826 28,622 154,720 73,067 0 37,091 43,840 9,018 58,450 (66,746)
1818 REDWOOD HOLLOW SMYRNA 117,458 26,434 216,673 112,104 0 56,421 61,966 3,506 14,357 (31,681)
1829 CLEARVIEW GREENWOOD 112,241 26,142 214,700 99,191 4,605 0 50,035 4,084 11,455 45,330
1832 ANSLEY OAKS O'FALLON 125,925 40,978 150,377 115,605 13,602 30,089 57,019 4,870 5,001 (75,809)
1844 OLIVEWOOD 237,712 71,062 608,074 252,263 0 0 162,353 4,477 7,764 181,217
1847 RED DEER FAIRBORN 102,007 20,648 230,767 119,609 0 0 55,052 5,390 4,378 46,338
1851 ASHGROVE II 156,261 51,492 328,190 202,775 0 43,870 85,844 6,453 7,538 (18,290)
1866 HEATHMOORE WAYNE II 91,863 35,137 201,085 86,360 0 11,629 38,094 2,060 9,586 53,356
1875 DOVER PLACE IV 104,987 29,201 271,970 168,300 0 73 56,519 9,938 6,737 30,403
</TABLE>
<PAGE> 18
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
------------------------------------------------------------------------------------------------------
Prop Real Interest Major
Oper Estate Net First Subord. Payable Depre Maint. Non
& Taxes & Operating Mortgage Debt To & & Operating Net
# Name Maint Insur. Income Interest Interest Lexford Amort Replace Expenses Income
- ------------------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS (1)
-------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1905 CAMBRIDGE COMMONS II 129,666 31,096 168,436 84,293 0 23,376 46,539 7,761 (354,741) 361,208
1907 DOGWOOD GLEN MARION II 122,801 35,074 214,120 124,686 0 14,494 53,766 9,650 12,166 (642)
1916 CLEARVIEW GREENWOOD II 120,970 17,659 283,914 119,055 21,348 0 52,682 2,932 8,026 79,871
1928 WOODLANDS III 130,017 49,423 246,243 171,523 0 0 70,461 13,032 15,648 (24,421)
1944 TIMBERCREEK 101,958 39,006 211,344 152,720 0 0 53,673 7,774 22,960 (25,783)
2100 SANFORD CT INVESTORS 228,396 52,665 250,656 165,598 0 0 72,182 13,547 (44,541) 43,870
2106 OLD ARCHER CT 125,246 34,440 181,358 94,068 0 19,211 34,728 6,240 5,466 21,645
2107 PALATKA OAKS 70,708 14,603 42,992 16,595 0 18,757 13,967 7,718 (18,302) 4,257
2112 TURKSCAP 98,501 22,771 99,797 44,428 0 10,837 20,644 10,111 (1,837) 15,614
2114 CEDARWOOD 81,168 24,382 122,514 56,550 0 6,240 36,326 13,826 (233) 9,805
2115 UNIVERSITY SQ 144,855 31,770 192,766 83,863 0 11,334 52,660 9,858 (9,346) 44,397
2129 NORTHWOOD 83,768 22,256 58,466 47,171 0 46,280 29,699 2,963 12,869 (80,516)
2139 MEADOWOOD II 105,121 28,683 147,260 75,143 0 5,815 41,260 8,647 (1,424) 17,819
2143 CEDARWOOD II 58,707 18,633 89,406 48,436 0 27,593 30,558 12,727 11,543 (41,451)
2153 NOVAWOOD 135,257 31,135 107,362 54,903 31,110 17,815 37,095 14,936 (1,410) (47,087)
2164 PALATKA OAKS II 55,589 12,903 43,967 17,760 0 13,278 20,140 7,487 (11,248) (3,450)
2165 NOVAWOOD II 130,147 33,656 128,465 71,001 0 24,336 40,002 15,130 53,937 (75,941)
2166 WINGWOOD 158,801 45,214 239,648 133,117 0 16,074 64,147 34,182 (47,695) 39,823
2173 COUNTRYSIDE 115,156 33,719 142,201 76,636 0 21,594 43,813 2,711 3,931 (6,484)
2174 COUNTRYSIDE II 177,154 57,744 242,515 123,684 28,338 0 72,690 17,722 (8,892) 8,973
2189 HIDDEN PINES 138,647 32,483 147,583 77,865 10,840 315 46,588 16,216 (50,162) 45,921
2190 MOSSWOOD 112,350 28,696 145,324 71,727 0 33,769 44,885 12,050 (1,976) (15,131)
2191 MOSSWOOD II 163,090 44,446 245,683 99,113 2,614 113,910 63,088 16,576 5,644 (55,262)
2196 BRANCHWOOD 190,071 54,906 311,350 221,427 0 1,472 72,547 1,121 (8,819) 23,602
2199 CONCORD SQ II 148,396 34,249 149,239 71,653 0 79,773 68,525 17,999 1,696 (90,407)
2205 BRANDYWYNE EAST 73,342 21,923 88,564 42,997 10,416 41,337 20,300 8,151 (1,560) (33,077)
2212 AMBERWOOD 112,428 22,990 100,256 36,335 0 40,584 35,497 2,621 3,819 (18,600)
2215 COUNTRYSIDE III 57,956 18,999 82,827 40,227 8,440 7,308 23,822 5,051 5,956 (7,977)
2218 INDIAN RIDGE 95,376 24,908 183,372 86,333 0 15,549 52,713 21,489 (2,188) 9,476
2222 SHADOWOOD 109,048 45,060 189,418 79,715 0 36,000 45,917 16,414 (132,339) 143,711
2224 ROSEWOOD 118,583 34,255 119,061 82,335 0 19,858 47,538 6,567 (3,170) (34,067)
2226 SPRINGTREE 166,804 40,726 224,513 110,119 0 463 62,002 18,689 113 33,127
2230 RIVERWOOD 125,491 31,396 158,527 68,858 0 56,011 50,208 9,659 4,368 (30,577)
2231 APPLEWOOD 121,979 32,866 171,360 100,116 0 15,614 47,059 17,890 88,761 (98,080)
2234 WINDRUSH 135,773 28,709 148,441 81,714 3,051 56,694 55,258 8,901 (4,440) (52,737)
2235 HERONWOOD 123,118 27,909 150,554 89,398 3,386 25,244 49,142 10,116 (3,318) (23,414)
2237 SANDPIPER II 113,732 57,976 127,077 81,907 0 34,920 50,628 6,902 3,924 (51,204)
2240 BAYSIDE 112,541 29,532 87,620 53,335 13,373 53,060 33,266 70,847 (19,795) (116,466)
2242 DEERWOOD 98,939 19,099 119,481 53,681 12,819 35,474 33,232 14,893 4,294 (34,912)
2244 CANDLELIGHT 94,052 30,060 89,174 53,394 0 53,004 41,848 16,381 33,664 (109,117)
2246 GARDEN TERRACE II 117,337 30,087 88,025 58,424 0 71,905 56,052 9,484 (3,744) (104,096)
2247 INDIAN RIDGE II 63,595 17,533 129,001 54,188 0 13,122 34,859 17,129 (1,525) 11,228
2249 SHADOWOOD II 103,672 41,556 188,909 98,826 3,381 8,742 48,553 13,018 2,390 13,999
2251 STRAWBERRY PLACE 122,179 24,149 100,004 38,405 0 44,504 36,705 14,771 83,386 (117,767)
2254 TURKSCAP III 102,052 24,861 119,989 74,507 (740) 37,847 43,197 10,166 44,707 (89,695)
2265 PINE LAKE 85,104 17,977 73,137 26,049 3,875 45,100 28,860 6,991 (2,289) (35,449)
2284 CAPITAL RIDGE 134,642 37,065 197,592 118,556 0 14,580 63,639 14,748 (25,942) 12,011
2285 WOODLAND 160,471 46,343 266,583 128,397 18,036 7,389 68,451 12,360 (33,633) 65,583
2288 SHADOW RIDGE 119,808 34,837 162,519 81,252 0 66,676 49,228 8,073 3,999 (46,709)
2295 HICKORY PLACE 120,364 40,370 200,323 117,944 0 101,478 57,829 21,006 (142,749) 44,815
2300 PINE TERRACE 116,721 30,005 185,976 125,484 4,291 87,946 49,706 3,326 4,370 (89,147)
2301 PALM PLACE 173,321 50,648 248,529 107,502 6,230 54,344 59,939 17,935 2,401 178
2309 THE LANDINGS 129,400 31,798 116,997 62,204 0 58,914 49,364 15,731 4,158 (73,374)
2311 ASTORWOOD 191,163 53,295 266,501 150,914 (3,757) 37,611 72,628 29,174 (5,004) (15,065)
2312 PINELLAS PINES 131,250 44,836 174,863 106,126 0 12 46,751 2,592 5,355 14,027
2313 SPRING GATE 127,879 25,898 159,491 76,853 0 55,709 44,345 12,565 (4,053) (25,928)
2314 GARDEN TERRACE III 153,728 43,074 134,452 81,961 0 103,592 77,199 16,593 (1,951) (142,942)
2340 SHADOW BAY 111,480 29,232 131,914 99,218 0 9,305 39,454 13,919 94,073 (124,055)
</TABLE>
<PAGE> 19
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
------------------------------------------------------------------------------------------------------
Prop Real Interest Major
Oper Estate Net First Subord. Payable Depre Maint. Non
& Taxes & Operating Mortgage Debt To & & Operating Net
# Name Maint Insur. Income Interest Interest Lexford Amort Replace Expenses Income
- ------------------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS (1)
-------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2341 TERRACE TRACE 158,627 41,446 209,532 88,337 0 70,808 61,548 17,961 2,791 (31,913)
2343 KINGS CROSSING 151,407 31,426 168,215 106,263 0 70,658 61,591 18,013 (2,901) (85,409)
2344 ELMWOOD 106,816 33,235 176,446 81,261 19,882 25,020 38,511 7,820 4,508 (556)
2355 NOVA GLEN 133,443 30,787 125,802 73,903 17,148 64,295 48,779 12,502 (7,297) (83,528)
2363 MORNINGSIDE II 311,620 88,049 122,987 87,926 21,298 148,208 133,436 7,089 17,405 (292,375)
2365 APPLEWOOD II 138,206 48,545 127,974 126,324 0 21,877 72,573 832 118,896 (212,528)
2376 MOULTRIE 171,513 36,350 251,708 114,338 0 54,000 64,674 25,054 10,038 (16,396)
2379 SUGARTREE 91,421 34,639 167,659 87,707 0 49,117 48,443 10,454 (857) (27,205)
2387 SOUTHGATE 172,794 69,326 173,780 98,042 0 60,098 46,974 12,148 (3,439) (40,043)
2399 SUTTON PLACE 110,298 26,027 118,250 49,719 10,879 44,632 37,447 22,603 6,284 (53,314)
2405 DRIFTWOOD 131,933 31,825 161,669 34,339 38,573 2,306 49,685 9,022 6,182 21,562
2407 PINE MEADOWS 135,174 29,932 152,857 84,140 0 61,779 46,878 3,234 4,124 (47,298)
2411 ELMWOOD II 103,942 33,532 174,839 115,400 0 64,623 51,801 9,577 (1,951) (64,611)
2412 PARKWAY NORTH 129,167 28,160 139,850 79,772 2,979 16,734 46,877 8,431 (3,479) (11,464)
2416 PINE TERRACE II 98,747 28,021 164,244 109,289 3,738 59,972 47,177 12,736 (4,649) (64,019)
2422 HILLVIEW TERRACE 119,486 22,732 176,585 99,000 0 50,288 49,074 13,959 20,980 (56,716)
2427 HILLCREST VILLA 125,039 25,042 158,071 88,172 0 33,803 45,097 10,255 (1,471) (17,785)
2429 CYPRESS 116,139 27,149 204,359 93,225 10,607 71,709 62,989 20,951 3,400 (58,522)
2431 OLYMPIAN VILLAGE 213,249 67,321 226,683 170,770 0 26,703 63,975 18,339 (3,345) (49,759)
2432 SILVER FOREST 80,509 25,915 126,731 75,717 0 46,558 39,543 11,299 41,127 (87,513)
2438 BERRY PINES 115,995 30,163 159,615 78,434 0 45,290 45,213 14,687 5,185 (29,194)
2439 OAK RIDGE 118,038 29,153 178,743 107,301 0 47,127 50,778 12,256 (2,550) (36,169)
2441 OAK SHADE 141,744 46,735 236,615 116,603 0 52,430 64,470 20,486 (5,501) (11,873)
2442 HOLLY SANDS 116,603 32,430 246,619 125,497 0 28,031 63,915 16,120 9,971 3,085
2443 BROADVIEW OAKS 140,620 41,205 216,174 150,317 0 4,537 60,324 25,997 113,701 (138,702)
2444 THYMEWOOD 225,742 64,537 295,045 207,429 0 77,259 79,559 14,005 3,413 (86,620)
2446 SHADOW BAY II 125,052 33,751 147,830 89,185 0 40,218 53,212 23,866 2,617 (61,268)
2447 CANDLELIGHT II 102,179 34,713 101,162 52,919 0 53,640 41,512 20,053 47,784 (114,746)
2449 SUGARTREE II 89,225 34,926 166,783 87,199 0 50,326 45,892 11,122 5,248 (33,004)
2451 WINTER WOODS 137,471 26,872 127,138 75,309 0 33,236 36,892 11,169 (2,131) (27,337)
2452 WOODLAND II 140,897 34,931 224,776 106,778 25,655 53,984 63,094 13,622 1,650 (40,007)
2454 BEL AIRE 182,532 47,347 194,226 126,130 14,421 52,354 58,460 17,133 (14,010) (60,262)
2459 CLEARLAKE PINES II 109,887 29,359 125,790 90,141 0 40,648 42,978 7,615 (3,154) (52,438)
2460 MANCHESTER 150,869 36,383 197,432 114,039 0 15,535 56,343 15,572 (9,775) 5,718
2461 RANCHSIDE 131,273 29,815 159,767 56,034 0 55,883 48,594 10,258 (3,907) (7,095)
2464 ESSEX SQ 142,223 33,913 266,814 95,482 0 26,463 56,318 7,379 7,932 73,240
2465 WESTCREEK 150,219 46,941 215,609 124,739 28,161 58,709 63,863 832 4,783 (65,478)
2466 SKY PINES 152,085 46,537 234,441 114,692 0 67,905 57,901 19,550 (4,134) (21,473)
2470 RIVERS END 109,000 37,829 191,027 125,257 0 51,708 59,013 13,250 (3,060) (55,141)
2471 BRIDGE POINT 152,544 36,885 172,767 95,263 0 32,901 52,336 4,988 5,032 (17,753)
2478 NOVA GLEN II 157,307 44,142 156,140 101,994 0 54,381 60,194 22,393 (8,450) (74,372)
2483 OAKWOOD MANOR 117,862 44,897 175,209 111,343 27,276 31,283 52,349 7,333 6,185 (60,560)
2484 HOLLY RIDGE 259,733 69,041 254,388 200,611 30,535 26,495 73,295 17,362 (7,024) (86,886)
2488 HIGH POINTS 135,449 49,301 223,624 83,845 0 76,475 67,223 5,670 4,974 (14,563)
2499 WINTER WOODS II 86,332 19,866 115,053 68,174 2,548 36,561 30,491 3,055 3,202 (28,978)
2502 PALM SIDE 164,026 44,819 177,949 99,395 3,723 61,476 56,907 11,473 (30,558) (24,467)
2574 PALM BAY/WINDWOOD II 117,675 29,100 114,960 33,728 7,997 30,004 (142,125) 18,159 2,565 164,632
3101 MEADOWOOD NORCROSS 130,359 25,621 247,545 93,016 0 4,176 50,062 10,938 (2,966) 92,319
3102 CEDARGATE 101,357 26,309 220,889 81,578 0 22,338 50,921 11,703 29,352 24,997
3104 WILLOW RUN DEKALB 142,120 30,648 234,548 152,495 0 27,339 50,689 5,508 (96,422) 94,939
3108 FOREST VILLAGE BIBB 145,516 36,780 259,886 105,587 0 38,777 58,055 15,076 36,956 5,435
3109 RIDGEWOOD DEKALB 103,217 27,086 229,010 118,043 0 28,788 42,347 14,243 9,557 16,032
3111 IRIS GLEN ROCKDALE 166,806 37,883 254,135 157,258 0 32,936 69,311 28,813 (84,393) 50,210
3112 MEADOWLAND CLARKE 113,769 22,734 153,665 78,166 0 20,820 45,600 9,002 3,686 (3,609)
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
------------------------------------------------------------------------------------------------------
Prop Real Interest Major
Oper Estate Net First Subord. Payable Depre Maint. Non
& Taxes & Operating Mortgage Debt To & & Operating Net
# Name Maint Insur. Income Interest Interest Lexford Amort Replace Expenses Income
- ------------------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS (1)
-------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3114 WILLOWOOD MILLEDGE. 116,814 18,454 178,539 105,422 0 21,814 46,124 4,909 13,978 (13,708)
3115 MEADOWOOD NORCROSS II 98,792 28,990 197,983 81,821 0 24,436 38,354 8,382 21,908 23,082
3116 VALLEYFIELD DEKALB 104,188 29,371 265,720 145,210 0 20,537 50,540 5,092 24,561 19,780
3117 NORWOOD GWINNETT 161,095 35,844 294,001 117,945 0 19,248 57,768 15,187 5,412 78,441
3118 SHADOW TRACE DEKALB 151,097 32,034 276,112 185,288 0 16,365 61,419 6,293 (8,340) 15,087
3120 OAKLEY WOODS 157,058 35,924 154,368 83,572 3,490 10,383 46,182 3,015 8,776 (1,050)
3121 ELMWOODS MARIETTA 106,279 16,901 191,046 78,264 0 36,910 43,926 10,869 10,726 10,351
3122 WOOD TRAIL NEWMAN 99,993 21,574 254,613 93,975 0 28,510 55,649 2,665 4,642 69,172
3123 REDAN VILLAGE DEKALB 135,781 35,397 260,351 112,314 0 53,371 68,477 8,457 9,706 8,026
3124 BARRINGTON DEKALB 100,789 20,291 149,349 91,760 0 39,088 39,324 4,919 (29,776) 4,034
3125 STRATFORD LANE 110,131 28,259 205,801 85,472 0 37,791 50,911 4,580 14,551 12,496
3127 WOODCLIFF LILBURN 123,936 32,862 285,042 105,999 0 42,597 64,338 9,851 5,339 56,918
3128 WOODCREST WAR. ROBINS 113,857 13,945 189,762 94,753 0 44,012 48,197 7,717 (591) (4,326)
3130 RAMBLEWOOD RICHMOND 132,340 21,170 217,499 136,602 0 33,378 60,838 3,211 80,593 (97,123)
3131 COUNTRYSIDE MANOR 166,273 24,215 298,080 110,081 0 44,641 75,076 17,338 21,285 29,659
3135 WATERBURY CLARKE 105,261 17,417 171,368 60,348 0 27,953 41,053 10,472 188,200 (156,658)
3137 GENTIAN OAKS 106,509 26,767 181,758 102,536 0 36,600 45,008 1,778 3,895 (8,059)
3138 WILLOW CREEK GRIFFIN 111,828 16,309 155,852 76,001 0 26,895 37,922 2,420 37 12,577
3139 TIMBERWOODS PERRY 123,865 17,660 150,016 50,328 0 32,904 38,868 11,310 167,867 (151,261)
3140 CARRIAGE HILLS DUBLIN 109,531 20,726 138,246 65,388 0 63,241 48,430 3,572 6,334 (48,719)
3141 HILLANDALE MAN. DEKALB 87,495 20,881 198,488 68,549 0 28,276 46,644 8,115 2,263 44,641
3142 WHISPERWOOD CORDELE 96,585 22,985 104,826 51,794 0 33,211 32,837 2,478 139,597 (155,091)
3143 OAKWOOD VILLAGE RICH. 126,015 20,744 198,132 99,354 159 36,274 51,176 7,832 334,066 (330,729)
3145 PINE KNOLL CLAYTON 89,518 21,355 149,580 63,665 0 25,127 31,921 1,160 (12,450) 40,157
3149 HARBINWOOD GWINNETT 156,551 29,987 298,834 148,840 0 50,119 66,255 22,584 6,160 4,876
3150 PARKWOOD VILLAGE 118,035 23,557 259,392 114,754 0 35,160 62,292 5,460 10,697 31,029
3151 AMBERWOOD BARTOW 85,798 14,483 199,438 81,945 1,750 34,025 43,367 2,181 216,393 (180,223)
3152 WOOD VALLEY CALHOUN 102,223 13,671 206,418 127,585 0 34,794 54,908 2,487 5,521 (18,877)
3153 NORTHRIDGE CARROLLTON 135,368 24,225 234,592 88,063 0 45,459 61,868 1,273 4,868 33,061
3154 HILLSIDE MANOR AMER. 122,342 16,096 96,239 56,160 0 38,141 53,242 2,758 3,980 (58,042)
3156 VALLEYFIELD DEKALB II 102,901 29,685 262,484 93,817 0 21,000 54,986 8,061 234,046 (149,426)
3158 WOODCLIFF LILBURN II 119,779 33,154 263,220 151,470 0 46,558 59,056 8,415 (8,215) 5,936
3159 FOREST RIDGE RICHMOND 150,563 13,245 106,659 12,085 0 35,502 48,342 5,213 (11,316) 16,833
3160 SHANNON WOODS II 189,832 35,368 100,047 62,220 0 16,663 53,136 8,127 4,453 (44,552)
3161 HOLLY PARK 125,654 23,419 146,445 72,289 0 32,415 46,473 (1,851) 316,949 (319,830)
3162 REDAN VIL DEKALB II 127,476 30,831 234,916 98,769 0 20,237 67,947 16,678 4,934 26,351
3163 RIDGEWOOD DEKALB II 84,478 22,944 178,129 90,233 0 29,880 45,298 9,821 (21,113) 24,010
3168 KNOX LANDING KNOXVILLE 150,844 44,724 220,110 141,780 0 38,868 61,415 6,532 5,632 (34,117)
3176 MORGAN TRACE 170,248 44,180 186,524 132,126 0 68,501 75,767 2,169 9,713 (101,752)
3184 AMBERWOOD BARTOW II 82,409 14,330 219,188 99,569 3,063 18,461 61,124 2,106 5,128 29,737
3197 PARKWOOD VILLAGE II 110,073 20,898 226,965 110,455 0 0 53,011 5,430 4,906 53,163
3200 SKYRIDGE 215,053 42,407 451,518 172,112 0 111 88,435 21,362 5,065 164,433
3266 MARSH LANDING 106,998 14,134 138,329 71,835 0 36,490 45,013 1,277 8,337 (24,623)
3269 WOODSIDE 75,721 6,425 164,640 89,083 0 45,230 53,083 5,094 3,585 (31,435)
3270 GREENTREE 64,355 11,590 115,554 65,271 0 9,500 38,371 11,694 3,710 (12,992)
3271 STILLWATER 114,800 28,001 153,800 86,073 0 31,089 38,632 10,591 55,734 (68,319)
3353 RAMBLEWOOD II 43,484 4,539 81,726 44,113 0 20,247 27,469 2,855 2,644 (15,602)
3358 LINK TERRACE 115,736 26,433 139,046 82,091 0 8,707 41,541 6,405 (253) 555
3366 GREENTREE II 52,793 6,721 79,267 48,911 0 15,503 35,802 10,072 8,971 (39,992)
3378 SUNNYSIDE 119,128 19,868 181,912 102,007 0 34,500 38,068 11,253 4,084 (8,000)
3409 QUAIL CALL 97,565 18,691 125,975 78,880 2,958 41,471 40,263 5,454 3,312 (46,363)
3428 WESTWAY 134,120 21,112 175,491 83,657 0 39,916 61,991 2,322 10,750 (23,145)
3430 CAMDEN WAY 100,424 14,684 116,269 84,578 3,489 32,192 50,300 4,769 32,216 (91,275)
3450 CAMDEN WAY II 99,461 11,853 119,672 70,153 0 33,233 55,591 3,964 206,671 (249,940)
4101 FORSYTHIA CT HARFORD 153,797 33,818 248,746 187,875 0 35,599 72,676 13,131 39,077 (99,612)
4708 ANNHURST HARFORD 145,427 25,830 260,068 119,524 0 24,847 71,311 5,097 5,251 34,038
---------------------------------------------------------------------------------------------------------
391 44,408,231 11,265,816 67,954,967 36,983,405 582,311 11,731,285 18,530,045 3,439,983 2,739,362 (6,051,424)
---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
OTHER FINANCIAL INFORMATION (CASH BASIS)
---------------------------------------------------------------------------
Contractual
First Subordinated Distribution Excess
Capital Mortgage Debt to Limited Cash Flow
Prop # Name Expenditures Principal Principal Partners To Lexford Investment
- --------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS
---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1109 DOGWOOD TERRACE 146,792 12,322 0 19,904 0 0
1112 LONDON LAMPLIGHT 23,905 32,995 0 0 29,195 0
1123 SPRINGFIELD WOODGATE 14,283 3,449 7,410 0 8,928 0
1262 THE BIRCHES OF LIMA 13,828 5,420 0 0 2,324 0
1297 PLUMWOOD 44,641 16,790 0 0 34,327 0
1310 MELDON PLACE 35,018 30,453 0 0 90,084 0
1320 WEST OF EASTLAND 101,167 7,238 0 0 22,110 (157,494)
1322 PARKVILLE 14,440 9,437 0 0 3,036 0
1327 CHARING CROSS 14,270 10,738 0 0 55,056 0
1329 INDEPENDENCE VILLAGE 57,407 17,394 0 0 0 0
1330 POPLAR CT 36,368 20,942 12,811 0 11,149 0
1341 GREENLEAF 0 2,628 0 0 0 0
1344 LAUREL CT FREMONT 17,489 11,057 0 0 2,600 0
1379 AMHURST 27,526 18,272 0 9,699 4,795 0
1404 KETWOOD 22,216 36,153 0 10,188 20,563 0
1437 HICKORY MILL 26,986 15,300 0 10,797 1,200 0
1455 MONTROSE SQ II 18,825 11,339 0 0 27,936 0
1456 APPLE RIDGE CIRCLEVILLE II 18,204 0 0 0 16,190 0
1460 WESTWOOD NEWARK 2,815 1,366 0 0 1,989 0
1461 APPLE RUN II 11,732 5,306 29,276 0 3,290 0
1462 PLUMWOOD CHESTERFIELD 17,565 11,626 0 0 332 0
1464 GREENGLEN WHEELERSBURG 35,186 0 0 0 37,501 0
1465 CEDARWOOD BELPRE 23,709 10,405 0 0 15,864 0
1466 AMHURST DAYTON II 27,022 21,054 0 14,708 5,720 0
1469 CHELSEA CT SANDUSKY 31,690 15,409 0 0 51,262 0
1470 MILLSTON ABERDEEN 19,126 6,421 0 0 8,623 0
1473 MILLBURN DAYTON II 45,330 0 0 0 38,530 0
1483 WOODBINE PORTSMOUTH 3,483 0 0 0 15,822 0
1485 HAMPSHIRE ELYRIA II 56,798 3,002 0 0 50,982 0
1489 PLUMWOOD FT. WAYNE 24,094 13,614 0 0 37,618 0
1491 CAMELLIA CT 8,353 8,197 0 0 6,666 0
1499 CONCORD SQ ONTARIO 21,405 7,814 0 0 18,991 0
1505 CAMELLIA CT DAYTON 53,384 0 0 0 12,716 0
1510 BECKFORD PLACE 53,708 3,907 0 0 0 0
1511 APPLEGATE CHILLICOTHE II 47,668 570 0 0 826 (101,968)
1512 SPRINGWOOD NEW HAVEN 23,238 11,202 0 0 13,546 0
1516 THE WILLOWS DELAWARE II 17,910 8,461 0 0 16,888 0
1519 GREENGLEN ALLEN II 27,187 0 0 0 26,401 0
1523 LARKSPUR MORAINE 8,280 6,553 0 0 9,440 0
1524 MILLSTON ABERDEEN II 4,781 4,781 0 0 11,926 0
1526 CAMELLIA CT 25,338 37,425 0 0 39,825 0
1527 WOODBINE CUYAHOGA FALLS 25,963 23,309 0 62,822 21,639 0
1528 APPLEGATE LORDSTOWN 7,758 11,547 0 0 2,764 0
1529 PARKVILLE ENGLEWOOD 5,864 13,243 0 10,990 50,597 0
1530 CEDARWOOD SABINA 7,272 8,589 0 0 2,436 0
1531 ANDOVER CT MT. VERNON 15,096 19,885 0 0 5,098 0
1533 HAMPSHIRE BLUFFTON 40,458 10,118 0 0 0 0
1534 CONCORD SQ 13,163 5,969 0 0 37,944 0
1535 GREENGLEN II 20,177 10,339 0 0 31,536 0
1539 FOXTON SEYMOUR 21,217 5,424 0 0 0 0
1540 DARTMOUTH PLACE KENT 22,081 21,335 0 15,390 2,926 0
1549 CAMELLIA CT DAYTON II 26,782 17,570 0 0 14,902 0
</TABLE>
<PAGE> 22
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
OTHER FINANCIAL INFORMATION (CASH BASIS)
---------------------------------------------------------------------------
Contractual
First Subordinated Distribution Excess
Capital Mortgage Debt to Limited Cash Flow
Prop # Name Expenditures Principal Principal Partners To Lexford Investment
- --------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS
---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1550 APPLEGATE 35,292 28,528 0 9,174 38,505 0
1553 APPLE RIDGE CIRCLEVILLE III 16,712 8,262 0 7,077 3,408 0
1554 SPRINGWOOD AUSTINTOWN II 13,634 23,729 7,794 0 0 0
1555 DOVER PLACE EASTLAKE 36,987 25,362 0 59,670 26,100 0
1556 PARKVILLE PARKERSBURG 3,795 6,458 0 0 22,348 0
1557 HARTWICK TIPTON 20,961 17,184 12,619 0 11,936 0
1558 BECKFORD PLACE THE PLAINS 42,782 22,823 0 0 46,955 0
1559 LARKSPUR 20,649 37,981 0 0 15,706 0
1560 SPRINGWOOD 6,275 8,933 0 0 1,069 0
1561 PARKVILLE GAS CITY 46,104 0 0 0 11,557 0
1562 CAMELLIA CT CARROLLTON 4,981 24,406 0 0 18,878 0
1563 FOXTON DAYTON II 26,094 18,453 0 0 897 0
1566 APPLE RUN HILLSDALE 9,615 14,873 0 0 11,155 0
1567 PINE GROVE ROSEVILLE 41,241 0 0 0 58,465 0
1568 ASHGROVE FRANKLIN 79,866 0 0 0 38,078 0
1569 MEADOWOOD JACKSON 10,712 0 0 0 55,443 0
1572 CONCORD SQ KOKOMO 24,156 27,932 0 0 38,258 0
1573 SANDALWOOD ALEXANDRIA 46,147 0 0 0 13,287 0
1574 AMHURST 14,635 18,110 0 0 39,868 0
1575 HAMPSHIRE WILLIAMSTOWN 3,014 6,267 0 0 21,619 0
1576 MEADOWOOD MANSFIELD 4,266 11,756 0 0 4,703 0
1577 HICKORY MILL HURRICANE 26,509 0 0 0 39,892 0
1579 MEADOWOOD FRANKLIN 19,205 12,510 0 57,691 100,944 (1)
1581 CEDARWOOD GOSHEN 8,766 12,911 0 26,555 2,360 0
1582 CONCORD SQ ONTARIO II 17,843 5,235 0 0 0 0
1583 MEADOWOOD CRAWFORDSVILLE 9,587 18,645 0 0 21,694 (1)
1585 BECKFORD PLACE 7,272 15,668 0 0 46,072 0
1588 PLUMWOOD III 7,787 10,007 0 0 53,157 0
1589 WOODLANDS 53,375 22,362 0 0 2,022 0
1590 WOODLANDS FRANKLIN 30,971 7,296 3,330 0 0 0
1591 MEADOWOOD FLATWOODS 3,954 0 0 0 17,345 0
1592 GREENGLEN DAYTON 32,356 25,676 0 0 34,264 0
1593 ASHGROVE 25,588 23,200 0 0 58,514 0
1595 MEADOWOOD NICHOLASVILLE 8,211 0 0 0 97,437 0
1596 STONEHENGE RICHMOND 24,066 0 0 0 49,465 0
1597 WILLOWOOD 59,410 3,277 0 40,515 22,740 0
1598 CEDARGATE 54,150 29,892 0 0 26,052 0
1599 WILLOW RUN WILLARD 14,449 26,144 0 0 0 0
1600 HEATHMOORE JEFFERSON 16,999 12,380 0 0 25,625 0
1601 STONEHENGE GLASGOW 37,814 6,098 0 0 14,214 (35,911)
1602 HEATHMOORE 28,933 0 0 21,492 15,671 0
1603 APPLE RUN TRUMBULL 8,275 15,084 0 0 0 0
1604 FOXTON MONROE 28,929 12,089 0 2,314 28,655 0
1605 ASHGROVE CALHOUN 27,286 0 0 0 17,610 0
1606 STONEHENGE OTTAWA 12,750 7,453 0 0 24,348 (1)
1613 WOODLANDS ZELIENOPLE 14,255 0 0 0 65,274 0
1615 RIDGEWOOD WESTLAND 27,934 3,168 0 26,393 10,513 0
1616 HEATHMOORE MACOMB 36,407 11,053 0 0 997 (10,000)
1617 DOVER PLACE EASTLAKE II 27,078 0 0 31,680 12,018 0
1618 DOVER PLACE EASTLAKE III 12,563 0 0 16,560 5,914 0
1619 CEDARGATE MICHIGAN CITY 49,840 0 0 0 26,242 0
1622 CEDARGATE BLOOMINGTON 33,468 36,185 0 0 30,445 0
1623 CEDARGATE 12,887 4,441 0 0 0 0
1624 STONEHENGE JEFFERSON 14,613 19,451 0 0 45,484 0
1626 SLATE RUN 15,134 0 0 17,126 101,022 0
1630 SANDALWOOD 9,486 0 0 0 45,899 0
1635 RIDGEWOOD 6,286 7,502 0 0 23,956 0
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
OTHER FINANCIAL INFORMATION (CASH BASIS)
---------------------------------------------------------------------------
Contractual
First Subordinated Distribution Excess
Capital Mortgage Debt to Limited Cash Flow
Prop # Name Expenditures Principal Principal Partners To Lexford Investment
- --------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS
---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1637 APPLEGATE DELAWARE 26,751 0 0 0 51,780 0
1638 MEADOWOOD LOGANSPORT 18,733 9,540 0 0 24,425 0
1639 SLATE RUN LEBANON 16,349 0 0 0 30,334 0
1640 WESTWOOD ROCHESTER 11,764 7,819 0 0 0 0
1641 WILLOWOOD WOOSTER 16,197 15,815 15,742 0 13,465 0
1642 STONEHENGE STARK 18,311 8,342 0 0 52,739 0
1644 RIDGEWOOD LEXINGTON 11,242 27,614 0 0 76,020 0
1645 RIDGEWOOD BEDFORD 11,053 0 0 0 38,698 0
1646 CAMELLIA CT II 3,961 0 0 0 40,009 0
1647 CEDARGATE ENGLEWOOD 45,521 0 0 0 37,998 0
1648 SLATE RUN HOPKINSVILLE 41,457 12,127 0 0 0 0
1649 WILLOWOOD GROVE CITY 9,932 0 0 0 47,928 0
1650 MEADOWOOD 13,521 30,262 0 0 15,960 0
1651 STONEHENGE 18,704 0 0 0 80,242 0
1652 MEADOWOOD WARRICK 12,748 20,127 0 0 0 0
1653 WILLOWOOD EAST 6,909 6,351 0 0 37,648 0
1655 CEDARGATE SHELBY 9,747 13,967 0 0 5,092 (41,476)
1656 RIDGEWOOD RUSSELVILLE 8,065 3,041 0 0 0 0
1657 WILLOW RUN NEW ALBANY 24,400 0 0 0 88,643 0
1658 ASHGROVE JEFFERSON 18,319 14,022 0 0 63,906 0
1659 SLATE RUN JEFFERSON 35,406 26,952 0 0 35,402 0
1660 MEADOWOOD LEXINGTON 11,239 20,019 0 0 22,023 0
1661 FORSYTHIA CT 17,983 32,159 0 0 5,196 0
1663 WATERBURY GREENWOOD 21,774 0 0 0 29,966 0
1664 SLATE RUN BARDSTOWN 27,634 10,232 0 0 20,667 0
1666 WILLOWOOD FRANKFORT 39,706 0 0 0 25,316 0
1667 BECKFORD PLACE NEW CASTLE 7,548 0 0 0 23,252 0
1669 WILLOWOOD OWENSBORO 11,286 7,298 0 0 0 0
1670 STONEHENGE MONTGOMERY 20,312 17,449 0 0 32,521 0
1671 LARKSPUR MORAINE II 3,333 7,272 0 0 0 0
1673 SLATE RUN BEDFORD 44,879 17,039 0 0 9,812 0
1674 ROSEWOOD JEFFERSON 15,464 21,476 0 0 69,884 0
1676 MILLBURN STOW 15,982 27,082 4,582 0 31,986 0
1677 WILLOW RUN MADISONVILLE 53,090 0 0 0 29,545 0
1678 CEDARWOOD GOSHEN II 13,647 7,194 0 0 4,090 0
1679 HEATHMOORE EVANSVILLE 64,695 15,280 0 0 62,934 0
1681 FOREST PARK MEADOWOOD 11,398 47,373 0 0 0 0
1682 STONEHENGE TECUMSEH 3,571 0 0 3,722 41,466 (1)
1683 BRANDON CT BLOOMINGTON 32,080 19,075 0 0 34,939 0
1686 ASHGROVE 73,298 18,040 0 0 87,121 0
1687 MONTGOMERY CT INGHAM 21,376 16,136 0 0 39,719 0
1691 PINE GROVE ROSEVILLE II 16,653 9,733 0 0 19,033 0
1692 MEADOWOOD MONROE 15,654 5,159 0 0 30,401 0
1695 ANNHURST 65,545 0 0 0 11,101 (75,388)
1696 ANNHURST ALLEGHENY 18,188 28,150 0 0 72,740 0
1698 WOODLANDS STREETSBORO 14,526 36,764 6,498 0 63,040 0
1699 ROANOKE OAKLAND 34,909 22,263 0 0 23,823 (446,147)
1700 DANIEL CT CLERMONT 20,548 10,149 0 0 42,703 (30,366)
1703 BARRINGTON BEDFORD 13,992 50,469 2,176 0 11,438 0
1704 MULBERRY HILLIARD 36,354 14,784 0 0 19,250 0
1705 WOODLANDS II 22,876 14,448 31,868 0 1,192 0
1707 LARKSPUR II 19,810 0 0 0 57,752 0
1714 NEWBERRY EATON 8,608 15,319 0 0 59,528 0
1717 HICKORY MILL HURRICANE II 9,122 0 0 0 41,832 0
1718 MEADOWOOD II 13,047 0 0 0 3,553 0
1719 VALLEYFIELD LEXINGTON 15,379 0 0 0 98,516 0
1720 RIDGEWOOD II 7,287 7,252 0 0 25,465 0
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
OTHER FINANCIAL INFORMATION (CASH BASIS)
---------------------------------------------------------------------------
Contractual
First Subordinated Distribution Excess
Capital Mortgage Debt to Limited Cash Flow
Prop # Name Expenditures Principal Principal Partners To Lexford Investment
- --------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS
---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1721 OLIVEWOOD 30,128 20,993 0 0 53,776 0
1723 ROANOKE JEFFERSON 21,117 40,615 0 0 28,466 0
1724 MEADOWOOD CUYAHOGA FALLS 14,702 17,181 0 0 39,711 0
1725 RIDGEWOOD LEXINGTON II 11,888 14,275 0 0 57,860 0
1726 STONEHENGE JASPER 24,529 6,633 0 0 19,106 0
1727 CARLETON CT KANAWHA 10,896 19,805 0 0 66,071 0
1728 NEWBERRY GROVE CITY 6,095 0 0 0 34,141 0
1729 BECKFORD PLACE II 4,087 16,423 0 0 36,487 0
1730 NORTHRUP CT ALLEGHENY 24,441 0 0 0 39,688 0
1731 FORSYTHIA CT JEFFERSON 20,928 11,609 0 0 80,317 0
1732 WINTHROP CT FRANKFURT 46,470 15,987 0 0 18,221 0
1733 PRINCETON CT EVANSVILLE 8,889 6,145 0 0 25,893 0
1735 ROSEWOOD 30,946 28,800 0 0 29,758 0
1737 SLATE RUN JEFFERSON II 44,147 0 0 0 50,195 0
1741 WILLOWOOD TROTWOOD 24,310 0 0 0 33,499 0
1744 BRUNSWICK TRUMBULL 11,913 0 0 0 0 0
1745 WYCLIFFE CT 49,644 13,804 0 0 16,468 0
1747 SLATE RUN MIAMISBURG 14,023 10,689 0 0 24,365 0
1748 MONTGOMERY CT 25,542 0 0 0 44,481 0
1749 WATERBURY CLARKSVILLE 30,989 16,946 0 0 19,651 0
1751 WINTHROP CT 30,684 0 0 0 57,873 0
1752 PICKERINGTON MEADOWS 16,649 10,700 0 0 44,440 0
1756 WATERBURY CLERMONT 22,391 25,450 0 0 35,126 0
1757 WILLOWOOD GROVE CITY II 9,432 0 0 0 9,969 0
1758 CEDARGATE BLOOMINGTON II 22,613 14,780 0 0 40,463 0
1759 ACADIA CT BLOOMINGTON 18,862 16,235 0 0 105,824 0
1760 WILLOWOOD EAST II 5,275 11,127 0 0 24,401 0
1761 SHERBROOK 2,171 6,877 0 0 3,821 0
1762 LONGWOOD LEXINGTON 31,475 11,245 0 0 36,611 0
1763 NORTHRUP CT ALLEGHENY II 17,697 12,789 0 25,833 32,856 0
1765 LAURELWOOD CT BEDFORD 11,613 0 0 0 49,296 0
1768 CARLETON CT ANN ARBOR 15,388 34,370 0 0 158,502 0
1770 ALLEGHENY CO. VALLEYFIELD 55,685 22,835 0 0 2,990 0
1772 WENTWORTH ROSEVILLE 56,352 17,182 115 0 7,846 0
1773 WATERBURY WESTLAND 54,523 28,411 0 0 56,621 0
1777 HEATHMOORE II 21,148 25,561 0 0 47,914 0
1779 AMBERIDGE ROSEVILLE 34,040 11,917 0 0 23,413 0
1783 WOODLANDS STREETSBORO II 39,020 0 0 0 55,063 0
1785 CARLETON CT ERIE 5,421 19,408 0 0 1,340 0
1787 ROSEWOOD COMMONS 31,518 25,939 0 0 32,922 0
1790 WILLOWOOD FRANKFORT II 25,406 11,369 0 0 4,117 (1)
1794 ANNHURST 58,765 1,501 0 0 1,006 0
1799 BEREA TABOR RIDGE 24,529 45,837 0 0 0 0
1801 WILLOWOOD WOOSTER II 23,537 0 0 0 68,730 0
1804 CAMBRIDGE COMMONS 38,087 10,762 51,219 0 0 0
1805 OLIVEWOOD II 22,725 0 0 0 45,303 0
1807 BRUNSWICK MONONGALIA 16,227 21,597 0 25,174 20,101 0
1813 SUFFOLK GROVE GROVE CITY 7,966 15,999 0 0 160,575 0
1815 MONTGOMERY CT II 22,675 17,907 67,843 0 4,950 0
1818 REDWOOD HOLLOW SMYRNA 45,397 17,451 0 0 57,898 0
1829 CLEARVIEW GREENWOOD 19,038 24,300 62,555 40,079 17,177 0
1832 ANSLEY OAKS O'FALLON 33,209 16,345 9,081 0 0 0
1844 OLIVEWOOD 50,246 154,380 0 0 0 0
1847 RED DEER FAIRBORN 20,450 39,888 0 26,000 0 0
1851 ASHGROVE II 33,180 0 0 0 93,906 (18,390)
1866 HEATHMOORE WAYNE II 9,225 31,730 0 0 48,523 0
1875 DOVER PLACE EASTLAKE IV 28,350 0 0 43,207 1,544 0
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
OTHER FINANCIAL INFORMATION (CASH BASIS)
---------------------------------------------------------------------------
Contractual
First Subordinated Distribution Excess
Capital Mortgage Debt to Limited Cash Flow
Prop # Name Expenditures Principal Principal Partners To Lexford Investment
- --------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS
---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1905 CAMBRIDGE COMMONS II 57,078 8,009 0 0 9,853 (249,985)
1907 DOGWOOD GLEN MARION II 8,007 16,800 0 0 60,668 0
1916 CLEARVIEW GREENWOOD II 16,757 15,805 84,549 0 0 0
1928 WOODLANDS III 19,560 32,002 0 40,000 1,143 0
1944 TIMBERCREEK 14,670 83,150 0 0 0 (28,927)
2100 SANFORD CT INVESTORS 33,295 0 0 0 0 0
2106 OLD ARCHER CT 28,884 11,561 0 0 0 0
2107 PALATKA OAKS 15,292 2,732 0 0 5,190 0
2112 TURKSCAP 37,424 9,251 0 0 38,101 0
2114 CEDARWOOD 18,683 9,203 0 0 7,257 0
2115 UNIVERSITY SQ 90,393 12,254 0 0 19,975 0
2129 NORTHWOOD 36,035 8,459 0 0 2,258 0
2139 MEADOWOOD II 6,864 10,990 0 0 52,666 0
2143 CEDARWOOD II 14,423 8,197 0 0 5,638 0
2153 NOVAWOOD 11,386 6,325 1,704 0 107 0
2164 PALATKA OAKS II 13,520 3,005 0 0 10,807 0
2165 NOVAWOOD II 14,895 9,211 10,000 0 35,325 0
2166 WINGWOOD 34,559 16,921 0 52,407 18,985 0
2173 COUNTRYSIDE 44,403 8,253 0 0 2,464 0
2174 COUNTRYSIDE II 27,617 15,681 35,662 0 0 0
2189 HIDDEN PINES 17,203 10,460 33,319 0 0 0
2190 MOSSWOOD 17,212 10,497 0 0 50,400 0
2191 MOSSWOOD II 22,922 6,170 18,073 0 90,994 (200,000)
2196 BRANCHWOOD 17,492 23,105 0 0 0 0
2199 CONCORD SQ II 87,891 11,997 0 0 14,673 0
2205 BRANDYWYNE EAST 24,836 5,576 8,896 0 1,955 0
2212 AMBERWOOD 10,772 5,267 0 0 47,400 0
2215 COUNTRYSIDE III 8,558 5,312 8,294 0 111 0
2218 INDIAN RIDGE 15,685 12,633 0 32,529 19,104 0
2222 SHADOWOOD 31,185 9,359 0 0 0 0
2224 ROSEWOOD 7,359 13,934 0 0 11,045 0
2226 SPRINGTREE 69,930 13,998 0 634,173 22,183 0
2230 RIVERWOOD 48,399 12,268 0 0 58,155 0
2231 APPLEWOOD 49,345 15,314 0 0 1,493 0
2234 WINDRUSH 11,299 5,920 0 0 45,916 0
2235 HERONWOOD 27,559 6,470 0 0 29,111 0
2237 SANDPIPER II 12,387 17,139 0 0 9,299 0
2240 BAYSIDE 22,235 7,080 1,657 0 555 0
2242 DEERWOOD 16,740 7,004 0 0 1,143 0
2244 CANDLELIGHT 33,840 0 0 0 14,591 0
2246 GARDEN TERRACE II 71,182 9,816 0 0 11,974 0
2247 INDIAN RIDGE II 8,418 7,256 0 0 55,676 0
2249 SHADOWOOD II 5,853 7,159 0 0 1,196 0
2251 STRAWBERRY PLACE 9,749 9,638 8,438 0 4,736 0
2254 TURKSCAP III 59,001 0 0 0 23,789 0
2265 PINE LAKE 14,637 3,558 25,851 0 1,724 0
2284 CAPITAL RIDGE 35,420 17,287 0 0 22,692 0
2285 WOODLAND 19,186 16,735 56,369 0 5,499 0
2288 SHADOW RIDGE 22,417 11,738 0 0 50,916 0
2295 HICKORY PLACE 16,001 0 0 0 77,155 0
2300 PINE TERRACE 28,411 9,086 0 0 39,706 (1)
2301 PALM PLACE 33,720 22,452 0 0 151,238 0
2309 THE LANDINGS 47,730 10,236 0 0 21,072 0
2311 ASTORWOOD 52,173 0 0 0 56,000 0
2312 PINELLAS PINES 27,369 11,881 0 0 0 0
2313 SPRING GATE 14,045 16,064 0 0 65,233 0
2314 GARDEN TERRACE III 123,085 13,770 0 0 8,966 0
2340 SHADOW BAY 68,446 19,014 0 0 97 0
</TABLE>
<PAGE> 26
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
OTHER FINANCIAL INFORMATION (CASH BASIS)
---------------------------------------------------------------------------
Contractual
First Subordinated Distribution Excess
Capital Mortgage Debt to Limited Cash Flow
Prop # Name Expenditures Principal Principal Partners To Lexford Investment
- --------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS
---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2341 TERRACE TRACE 35,112 18,415 0 0 82,742 0
2343 KINGS CROSSING 18,733 0 0 0 23,722 0
2344 ELMWOOD 10,506 16,928 0 0 2,364 0
2355 NOVA GLEN 9,677 9,866 2,583 0 1,871 0
2363 MORNINGSIDE II 27,223 10,316 0 0 3,219 0
2365 APPLEWOOD II 19,922 0 0 0 80 (115,000)
2376 MOULTRIE 38,889 12,433 0 0 52,053 0
2379 SUGARTREE 9,556 10,866 0 0 81,788 0
2387 SOUTHGATE 18,050 20,436 0 0 31,075 0
2399 SUTTON PLACE 43,346 6,175 1,411 0 12,103 0
2405 DRIFTWOOD 22,839 3,773 0 0 1,232 0
2407 PINE MEADOWS 14,766 17,849 0 0 27,356 0
2411 ELMWOOD II 9,916 13,783 0 0 2,062 0
2412 PARKWAY NORTH 11,786 5,782 0 0 40,036 0
2416 PINE TERRACE II 24,755 7,916 0 0 36,993 0
2422 HILLVIEW TERRACE 44,489 0 0 0 47,116 0
2427 HILLCREST VILLA 48,434 0 0 0 44,646 0
2429 CYPRESS 89,787 10,648 30,460 0 2,039 0
2431 OLYMPIAN VILLAGE 33,726 30,110 0 0 0 0
2432 SILVER FOREST 13,037 0 0 0 32,988 0
2438 BERRY PINES 15,450 16,509 0 0 34,342 0
2439 OAK RIDGE 14,291 0 0 0 59,731 0
2441 OAK SHADE 45,121 24,314 0 0 59,333 0
2442 HOLLY SANDS 19,857 18,184 0 0 68,769 0
2443 BROADVIEW OAKS 26,865 15,141 0 0 1,313 0
2444 THYMEWOOD 23,505 0 0 0 45,534 0
2446 SHADOW BAY II 27,795 0 0 0 14,221 0
2447 CANDLELIGHT II 16,208 0 0 0 15,783 0
2449 SUGARTREE II 9,630 14,754 0 0 50,092 0
2451 WINTER WOODS 12,698 15,692 0 0 13,570 0
2452 WOODLAND II 18,318 14,067 13,836 0 3,525 0
2454 BEL AIRE 5,939 16,292 1,730 0 690 0
2459 CLEARLAKE PINES II 11,236 10,194 0 0 21,876 0
2460 MANCHESTER 15,759 0 0 0 33,296 0
2461 RANCHSIDE 31,208 11,365 0 0 88,487 0
2464 ESSEX SQ 29,019 19,932 0 1,836 122,641 0
2465 WESTCREEK 12,571 15,808 36,180 0 2,306 0
2466 SKY PINES 18,046 23,918 0 0 59,433 0
2470 RIVERS END 13,970 18,219 0 0 41,646 0
2471 BRIDGE POINT 11,432 16,120 0 0 37,518 0
2478 NOVA GLEN II 19,952 21,268 0 0 23,445 0
2483 OAKWOOD MANOR 9,230 15,289 0 0 0 0
2484 HOLLY RIDGE 15,896 26,363 4,679 0 2,247 0
2488 HIGH POINTS 20,252 17,494 0 0 114,191 0
2499 WINTER WOODS II 9,837 4,956 0 0 25,146 0
2502 PALM SIDE 15,455 7,228 0 0 44,860 0
2574 PALM BAY/WINDWOOD II 28,041 3,783 30,828 0 1,385 0
3101 MEADOWOOD NORCROSS 26,651 33,298 0 0 60,369 0
3102 CEDARGATE LAWRENCEVILLE 16,447 34,114 0 0 65,126 0
3104 WILLOW RUN DEKALB 14,427 0 0 0 88,054 0
3108 FOREST VILLAGE BIBB 20,722 43,547 24,097 0 23,346 0
3109 RIDGEWOOD DEKALB 26,291 21,031 0 0 77,238 0
3111 IRIS GLEN ROCKDALE 32,641 0 0 28,741 61,951 0
3112 MEADOWLAND CLARKE 7,396 16,283 0 0 26,688 0
3114 WILLOWOOD MILLEDGEVILLE 7,587 15,412 0 0 38,488 0
</TABLE>
<PAGE> 27
<TABLE>
<CAPTION>
LEXFORD, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1997
OTHER FINANCIAL INFORMATION (CASH BASIS)
---------------------------------------------------------------------------
Contractual
First Subordinated Distribution Excess
Capital Mortgage Debt to Limited Cash Flow
Prop # Name Expenditures Principal Principal Partners To Lexford Investment
- --------------------------------------------------------------------------------------------------------------------------
UNCONSOLIDATED PARTNERSHIPS
---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3115 MEADOWOOD NORCROSS II 12,122 30,610 9,823 0 22,424 0
3116 VALLEYFIELD DEKALB 4,214 17,124 0 0 126,681 0
3117 NORWOOD GWINNETT 13,967 24,592 0 0 139,916 0
3118 SHADOW TRACE DEKALB 9,388 17,308 0 23,256 58,263 0
3120 OAKLEY WOODS 17,312 6,061 0 0 64,840 (2)
3121 ELMWOODS MARIETTA 15,590 29,700 0 0 35,130 (1)
3122 WOOD TRAIL NEWMAN 8,195 37,250 0 0 46,069 0
3123 REDAN VILLAGE DEKALB 10,913 34,502 0 0 65,183 0
3124 BARRINGTON DEKALB 9,069 0 0 0 71,117 0
3125 STRATFORD LANE 9,683 34,852 0 0 47,301 0
3127 WOODCLIFF LILBURN 12,453 44,822 0 0 87,822 0
3128 WOODCREST WARNER ROBINS 15,465 19,079 0 0 49,287 0
3130 RAMBLEWOOD RICHMOND 14,169 19,960 0 0 9,684 0
3131 COUNTRYSIDE MANOR 19,669 44,639 0 0 108,050 0
3135 WATERBURY CLARKE 6,412 14,816 47,539 0 52,850 (87,835)
3137 GENTIAN OAKS 9,859 24,566 0 0 12,787 0
3138 WILLOW CREEK GRIFFIN 10,782 11,117 0 0 49,223 0
3139 TIMBERWOODS PERRY 13,967 12,505 25,102 0 26,883 (71,376)
3140 CARRIAGE HILLS DUBLIN 14,498 26,552 0 18,896 6,601 0
3141 HILLANDALE MANOR DEKALB 7,488 20,372 0 0 88,163 0
3142 WHISPERWOOD CORDELE 16,857 23,465 6,409 0 0 (76,477)
3143 OAKWOOD VILLAGE RICHMOND 4,971 34,791 43,971 0 0 (203,224)
3145 PINE KNOLL CLAYTON 17,828 9,458 0 0 55,707 0
3149 HARBINWOOD GWINNETT 28,344 21,728 0 0 75,185 0
3150 PARKWOOD VILLAGE 6,878 16,802 0 0 0 0
3151 AMBERWOOD BARTOW 2,912 34,087 39,603 0 44,645 (98,743)
3152 WOOD VALLEY CALHOUN 13,341 0 0 0 59,819 0
3153 NORTHRIDGE CARROLLTON 15,196 29,198 0 0 103,935 0
3154 HILLSIDE MANOR AMERICUS 21,007 21,144 0 0 10,383 0
3156 VALLEYFIELD DEKALB II 4,777 23,106 58,495 0 109,363 (63,482)
3158 WOODCLIFF LILBURN II 8,059 0 0 0 102,313 0
3159 FOREST RIDGE RICHMOND 4,010 0 0 0 53 0
3160 SHANNON WOODS II 16,183 7,453 0 5,791 10,160 (182,700)
3161 HOLLY PARK 9,344 17,813 56,579 0 1,936 0
3162 REDAN VILLAGE DEKALB II 9,991 24,336 0 0 78,509 0
3163 RIDGEWOOD DEKALB II 24,568 12,700 0 0 62,599 0
3168 KNOX LANDING KNOXVILLE 32,404 20,718 0 0 12,795 0
3176 MORGAN TRACE 12,554 19,728 0 0 1,482 0
3184 AMBERWOOD BARTOW II 3,931 18,401 0 0 0 0
3197 PARKWOOD VILLAGE II 5,140 16,170 0 12,384 5,307 0
3200 SKYRIDGE 38,830 42,346 0 0 9,427 0
3266 MARSH LANDING 13,376 32,494 0 0 2,026 0
3269 WOODSIDE 15,884 12,917 0 0 53,224 0
3270 GREENTREE 18,600 8,265 0 0 0 0
3271 STILLWATER 63,393 11,698 0 0 0 0
3353 RAMBLEWOOD II 5,386 6,396 0 0 20,126 0
3358 LINK TERRACE 23,998 12,001 0 0 18,539 0
3366 GREENTREE II 12,100 6,264 0 0 0 0
3378 SUNNYSIDE 17,689 13,652 0 0 43,703 0
3409 QUAIL CALL 31,264 5,713 0 0 1,200 0
3428 WESTWAY 11,633 30,943 0 0 22,714 0
3430 CAMDEN WAY 9,508 6,126 0 0 0 (1)
3450 CAMDEN WAY II 13,833 24,158 0 0 0 0
4101 FORSYTHIA CT HARFORD 29,564 0 0 0 78,846 0
4708 ANNHURST HARFORD 10,043 18,762 0 0 133,750 0
------------------------------------------------------------- ------------
391 9,176,228 5,304,675 1,051,056 1,484,773 11,953,920 (2,294,899)
------------------------------------------------------------- ------------
</TABLE>
